Game Theory Flashcards
(26 cards)
What is game theory?
A mathematical framework for analyzing strategic interactions among rational decision-makers.
True or False: Game theory is only applicable in economics.
False
Fill in the blank: A __________ is a situation in which two or more players make decisions that affect the outcomes for each other.
game
What are the two main types of games in game theory?
Cooperative and non-cooperative games.
What is a Nash Equilibrium?
A situation where no player can benefit by changing their strategy while the other players keep theirs unchanged.
Multiple choice: Which of the following is a key assumption in game theory? A) Players are irrational B) Players have complete information C) Players act independently
B) Players have complete information
What is a zero-sum game?
A situation in which one player’s gain is exactly balanced by the losses of other players.
True or False: In a cooperative game, players can form binding commitments.
True
What does the term ‘dominant strategy’ refer to?
A strategy that is the best choice for a player, regardless of what the other players choose.
Fill in the blank: The __________ is a graphical representation of a game that shows the players, strategies, and payoffs.
payoff matrix
What is a mixed strategy?
A strategy where a player randomizes over two or more pure strategies.
Multiple choice: In which type of game do players choose their strategies simultaneously? A) Sequential game B) Simultaneous game C) Cooperative game
B) Simultaneous game
What is the difference between a pure strategy and a mixed strategy?
A pure strategy involves choosing one specific action, while a mixed strategy involves randomizing over multiple actions.
True or False: The Prisoner’s Dilemma demonstrates that individual rational choices can lead to a worse outcome for all players.
True
What is the significance of the ‘Pareto efficiency’ concept in game theory?
An outcome is Pareto efficient if no player can be made better off without making another player worse off.
Fill in the blank: In game theory, __________ refers to the strategies that players can choose from.
action set
What is the best response in game theory?
The strategy that yields the highest payoff for a player given the strategies chosen by the other players.
Multiple choice: Which of the following is NOT a characteristic of a non-cooperative game? A) Binding agreements B) Individual strategies C) Payoff maximization
A) Binding agreements
What is backward induction?
A method used to solve sequential games by analyzing the game from the end to the beginning.
True or False: Extensive form games are represented using trees.
True
What does ‘subgame perfect equilibrium’ refer to?
A refinement of Nash Equilibrium applicable in dynamic games where players’ strategies constitute a Nash Equilibrium in every subgame.
Fill in the blank: In game theory, __________ refers to the additional benefit gained from a particular strategy.
utility
What is a coordination game?
A game where players benefit from making the same choices or coordinating their strategies.
Multiple choice: Which concept explains why players might not cooperate even if it benefits them? A) Nash Equilibrium B) Dominant strategy C) Prisoner’s Dilemma
C) Prisoner’s Dilemma
