Game Theory

Question 1

Explain the Prisoner’s Dilemma.

Answer 1

Both players have an incentive to betray, leading to worse outcomes than if they cooperated.

Question 2

What is the Battle of the Sexes game?

Answer 2

A coordination game where both want to coordinate but prefer different outcomes.

Question 3

What is the Chicken game?

Answer 3

A game of brinkmanship where mutual aggression leads to the worst outcome.

Question 4

What’s special about Nash Equilbria

Answer 4

There’s no incentive to deviate

Question 5

What’s it called when players have an incentive to meet?

Answer 5

Pure coordination

Question 6

How does “pure coordination” work?

Answer 6

Pre-play coordination
Focal point (natural to-do)

Question 7

What are the four ways to coordinate an outcome?

Answer 7

Repetition
Reputation
Commitment
Bargaining

Question 8

What’s the Subgame Perfect NE

Answer 8

What happens in the branch that’s not played

Question 9

How is a game manipulated?

Answer 9

Credible commitment
Observable and Irreversible