Wordy q's

Question 1

Give an example of a zero sum game which has completely conflicting interests.

Answer 1

Penalty kick
Rock-paper-scissors

Question 2

Give an example of a game which have completely aligned interests

Answer 2

Escape rooms

Question 3

Give an example of a mixed motive game?

Answer 3

Working on a group project
Firms setting prices

Question 4

What is imperfect information

Answer 4

When a player doesn’t know some of the previous moves of the other players

Question 5

What is incomplete information?

Answer 5

Some players do not know something e.g. payoffs, before the game starts

Question 6

What is asymmetric information?

Answer 6

Some players know more than others

Question 7

What is strategic uncertainty?

Answer 7

not knowing what others will choose or have chosen

Question 8

What benefit do you get being the first mover?

Answer 8

Ability to commit to preferred option

Question 9

What benefit do you get from being the 2nd mover?

Answer 9

Flexibility to adapt to the choices of other players

Question 10

In the ultimatum game and the trust game, why might the proposer send positive amounts?

Answer 10

Inequality aversion
expecting negative reciprocity
Altruism

Question 11

In the ultimatum game, why might the responder reject positive amounts?

Answer 11

inequality aversion
negative reciprocity

Question 12

Why do players pass in the centipede game?

Answer 12

Failing to do backward induction
Altruism

Question 13

Why might an equilibria be more focal than others?

Answer 13

Due to shared history, culture and language, we can distinguish which equilibria is more likely

Question 14

Give a real life example of a ‘game’ which has pareto ranked equiibria

Answer 14

Bank runs either happen or not

Question 15

What is the difference between payoff dominant and risk dominant equilibria?

Answer 15

Payoff dominant - gives highest total payoffs
Risk dominant - If your beliefs are wrong, you do not lose anything

Question 16

What is inefficient lock in?

Answer 16

When a game converges to an inefficient equilibrium

Question 17

How can we facilitate effective coordination?

Answer 17

Allow players to punish eachother
pre-play communication

Question 18

In the trust game, why might the responder send positive amounts?

Answer 18

Inequality aversion
positive reciprocity

Question 19

How can we overcome inefficient lock in?

Answer 19

Introducing a bonus for effective cooperation
communication by a leader
repeat the game
feedback

Question 20

What are some mechanisms to sustain collusion?

Answer 20

Price-matching guarantee
communication

Question 21

What are strategic substitutes?

Answer 21

e.g. Cournot. If the other firm cuts production you want to increase yours
Explains the downward sloping BRF

Question 22

What are strategic complements?

Answer 22

e.g. Bertrand. If the other firm cuts prices, you want to cut yours
Explains the upward sloping BRF

Question 23

What are all the rationalizable strategies in cournot?

Answer 23

The NE

Question 24

What are all the rationalizable strategies in bertrand?

Answer 24

The NE and anything above

Question 25

Give an example of a rent-seeking game?

Answer 25

Competition in sports - expending costly effort
R&D investments

Question 26

Why might behaviour differ from NE (4)

Answer 26

NE sometimes assumes that people are selfish EU maximisers
NE assumes people have unlimited cognitive abilities
NE assumes that people have correct beliefs
NE is not sensitive to incentives

Question 27

What is the idea behind the quantal response equilibrium

Answer 27

Players best respond to each other but make mistakes. The more detrimental the mistake is to their payoffs, the less likely they are to make this mistake

Question 28

How can we expect players to converge to NE?

Answer 28

Through deliberation of the NE
Through learning

Question 29

What are 2 main ways to model learning in games? Explain

Answer 29

Belief learning - forming beliefs about what the opponent will do based on the observed past play and best respond to this belief
Reinforcement Learning - choosing strategies that did well in the past

Question 30

Under what conditions does behaviour converge to NE?

Answer 30

Repeated interactions.
Players are re-matched.
players receive good feedback on mistakes and how to correct them.
Game is simple or complexity is reduced.

Question 31

Why would players expend more effort than NE predicts?

Answer 31

If a player is risk seeking
non-monetary joy of winning

Question 32

What are some real-life examples of Prisoners dilemma?

Answer 32

Carbon emissions
Overuse of common-pool resources e.g. fishing
cooperation in group projects

Question 33

What is the difference between a conditional and an unconditional strategic move?

Answer 33

Unconditional strategic move is where your move doesn’t depend on what others do
Conditional moves are when you specify how you’ll respond to a certain move of the other player

Question 34

Name a real life example of a game of chicken

Answer 34

Situation where 1 person is enough to solve the problem
- one housemate has to clean the kitchen
- Nuclear proliferation and other situations where no one wants to back down

Question 35

What is commitment

Answer 35

Create a pregame in which you would commit to a strategy, changing the game from simultaneous to sequential.

Question 36

What are the two types of commitment?

Answer 36

Restrict own freedom to act
Change own payoff

Question 37

When are decisions strategic substitutes?

Answer 37

If the BRF are downward sloping

Question 38

When are decisions strategic compliments?

Answer 38

If the BRF is upward sloping