Topic 3 Seminar

Question 1

Sequential game = ?

Answer 1

A game in which players move in sequence, one after the other

Question 2

Can sequential games be represented using game trees?

Answer 2

Yes

Question 3

Backwards induction = ?

Answer 3

Procedure by which a player in a sequential game chooses a strategy by anticipating the strategies that will be chosen by other players in response to their choice

Question 4

Extensive form game = ?

Answer 4

A game portrayed by a game tree in which the sequence of actions by the players is made explicit

Question 5

Normal form representation = ?

Answer 5

A game portrayed in the form of a payoff matrix

Question 6

Extensive form representation = ?

Answer 6

A game described with a game tree

Question 7

First mover advantage = ?

Answer 7

A player who can commit to a strategy in a game before other players have acted

Question 8

Examples of first movers in the modern economy?

Answer 8

Employers setting wages and working conditions

Owners of companies setting prices

Banks and other types of lenders setting interest rates

Question 9

The ultimatum game = ?

Answer 9

A game in which a final decision must be made

An offer must be accepted or rejected

First player issues one of two offers, second player must either accept or reject one

Rejection results in 0,0 payoff

Question 10

What are pieces of evidence against people being entirely self-regarding?

Answer 10

Modal offers (most common offers)

Fairness (more than 20% offer, often rejected as people feel they’re treated poorly)