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Bus 307 final > Post MT > Flashcards

Post MT Flashcards

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1
Q

PD chareterized by

A

2 start coop or defect
dom start ot defect
NAsh outcome collectively inferior

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2
Q

how repetition sustaoin coop

A

fear of defecting leading to collapse of coop in future

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3
Q

repetion game types

A

finite: rollback = defect, outcome = 1 game round

infintite: allow for contingent strategeies

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4
Q

what must you do if consider defect

A

consider PV of future payoff–> may still defect depending on ROR

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5
Q

what is disoucnt factor

A

m/1+r

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6
Q

what is p

A

probablitiy that game CONTINUE

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7
Q

R is effective ror what equal to

A

R= (1+r)/(p-1)

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8
Q

ror dont need be high if and ex

A

% game over soon, like business with no future decrease quality

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9
Q

when will player defect

A

r is large and or loss from punish are low while gain defect is high and if prob game ends

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10
Q

defect with TFT and prob game ends formula is

A

H-C> (C-L)/(1+r)*p

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11
Q

how to discourage defect in 1 shot and ex

A

punishemnt for defect like violence–> now no dom strat 2 nash so randomize

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12
Q

3 solition to PD

A

repetion, punish, leadership

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13
Q

what is leadersip

A

change symmtery of game, 1 player lose more by defectexploit of large (more to lose) b small

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14
Q

explain price match and why not work

A

if all priced match then ifferent prices not possible 2 nash and most likley high price

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15
Q

what is most favoured customer clause

A

rebate against price drop and when drop price must pay back customer so dom start never have future sale

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16
Q

conntential arilines case

A

bonus for stats req buy in with excitement so could start by coop

incentive plan works if repeated, N not too large and ror low

get employee excited from the begining

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17
Q

collective action played between

A

1 and many people= multi person PD

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18
Q

2 charecterisitic of public goods

A

1- once created cost nothing offer 1 more consumer (non rivalrous)
2- non exclusive any once can access

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19
Q

why cant rely private collector for public goods

A

free ride

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20
Q

what is assurance game

A

1 player does better in off equil payoff, 2 nash

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21
Q

what is collective inaction

A

all players do better if no one acted or few did–> tradgedy of the commons

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22
Q

what is P(n) and what does it include

A

pay off for those who work incl cost articipate

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23
Q

what is total payoff two forms

A

Tn= npn + (N-n)sn

Nsn-n(sn-pn)– sn-pn = cost to participate use if constant difference

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24
Q

assume start by sn so what is decesion

A

decesion is pn+1 or sn

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25
if Nash = 0 all shirk what mean collectivley
S0< Pn prefer all partciipate but all shirk bc dom start
26
how to find nash in collective action
when pn+1 = sn
27
how to check if nash is stable
solve for n and check sn-1 and pn if pn+1 higher = stable
28
how to find optimum
Tn = n* pn + (N-n)* sn derive and set to 0 if n>N then it is max
29
what happen in stable and unstable nash
stable: n is small P>S, n large then shirks unstable: n small = shirk, n large = participate --> assurance game people do what others do
30
what happens when N is large
pn approx pn+1, if cost above 0 assume shirk, nash often n Pn bc Pn = sn-cost
31
beneift eqn if shirk =
free ride
32
net payoff work in beneift eqn
pn+1 into beneift - costs
33
is Sn> pn+1 when beneift eqn
yes bc no cost in shirk any re n will make relation hold
34
how to find optimum when beneift eqn and constant cost
N*sn - n*(sn-pn), take dt and set to 0
35
how resolve who shirks
repeated relation and punish shirk with exlcusion social norm established work = $ take adv of people who have larger beneift or leaders
36
what is extranality
cost or beenfits others not comepnsated for
37
coop always has
costs
38
how convert commute to + ( want higher # so can max)
use worst case and - sn or pn+cost
39
marginal beneift/priv gain =
pn+1-sn
40
negative extranality =
n * cost
41
net social costs answers is this good for society
private gain - negative extranality pn+1-sn -(n*cost) or can use tn forumla derive and set 0
42
what do indv care abt when it come to extranility
if pn+1-sn> 0, solve for pn will pn+1 until this n
43
how to limit n
1st come first serve, digit on plates, internalize extranility
44
how to inteenalize extranaility
set pn-t=sn
45
+ extranility and feedback loops
beenift for others swithc as weel "network effect"
46
how to max income class
tn = n*pn+ (N-n)*sn and find n that max
47
total, avg and marginal inc
total = n* eqn avg = eqn marginal = derive eqn
48
what is communist and issue
free distrabution of wealth lack info little inentive work to ability
49
how incentivze work in ocmmunism
sticks and detection from fellow workers need other mechanism to motivate lie free market more work = more $
50
what is aymetric info
prinicple with less info than agent in transaction
51
2 type of asymetric info
adverse selction- hidden charcterisitic moral hazard- hidden action
52
how different now vs lec 6 asym
design mechanism so party with info change option to reveal self --. now party with info choose option
53
what is mechanism design
process principle uses to devise correct set of incentive for agent ot reveal what is IC
54
what is IC
align interest between 2 players jointly max payoff for owner and employee
54
what is PC
ensure agent want participate
54
what is RFQ
specefies what type of contract and pmt
55
2 type of contract
1- cost plus: give contractor profit above costs, but contractor knows costs better than gov 2- fixed price: pay contractor 1 cost for entire job- contractor must be effeceint as possible to increase profit
56
how to solve asym with full info
know if contractor low or high cost, gov wnt max benfit to society, mb = value - cost, derive MB equation and set to 0
57
how solve without full info
gov dont know costs so guess with rl and rh and contractor selects
58
when building IC what does gov want
choose low costs low priced so net payoff for low contract higher than if high priced if high cost net payoff for high contractt must be > low priced which is trivial
59
when build PC what is goal
contractor to bid only happens if revnue from contract exceed cost incl PM
60
what is Ev in asym
prob*(value low- cost low) +
61
how solve constraint
change to equality, take high cost participation and low cost incentive combine and solve for rh and rl plug into value eqn and deive set to 0
62
cost asym to gov is
in low priced contract and Nh
63
eviednce for info revea mechanism
price discrim, hard vs soft cover, freq buyer, buy in buk, parking pass resident
64
what is hidden action
action by agent with mor einfo principle cant observe
65
IC for hidden action
induce high effort, exp utility high effort> low effort only 1 because 1 type of manger who choose effort
66
PC in hidden action
owner ensure manager get utility > alt
67
in mechanism desgin for hidden action
align interest to combine exp profit and expect employee put in effort
68
hidden action with full info
2 choices, same as alt and not care effort or min pmt with high effort vs other job
69
Effort IR not linear bc
more than good or bad, inter act LR multi project, use non linear price + bonus but may be little incentive to increase output bc % means little at v1 vs v2
70
downside of bonus
quaota must be percise, progressive target so still effort, time perdio--> may manipulate time to make binus like push off saes so use peicewise linear system: increase comission for target
71
oyster case
TFL couldnt build rail system so contract with transys EDS and cubic issue was lack innvation, cost dated, and EDS seceretive, lack Ip with cubic TFL settled for 5 million breaking contract
72
what do location games balance
desire for less comp being futher apart and beenfit being close for more sales
73
what outcome of location games
both players locate near each other--> dont care energy expense of consumer and no change in price bc competition
74
limit of location model
far apart may increase $, not sim decesion make may observe firm and choose, model for 2 firm in small market, 1 dimension and population evely distravuted
75
if center located between 5 and 6
could locate in either
76
if center somewhere in 6
split 6
77
ppl vary wtp so seller set up price discrim which is
diff price to diff consumer for same product
78
price discrim dont work if and comes down to what
dont work if arbitrage need be consumed on the spot so cant resell comes down to diff elascity
79
lose price dont lose as much value by wiating what this mean
uses impaitence to distinguish between customers price scheme take adv of this
80
if pricing conditional stragey means assume not sell to all what is condition
induce high buy in P1 set P just below WTP, if no sale first period then set P2 to WTP if higher than P2 both customer WTP
81
SPE VS NASH
SPE turn sim to seq, incl all 4 start so 2 nash, incl all nash even off equil In SPE if player move 2nd have dom start game dont change If player 1st have dom start then game can change both payers have dom the seq = sim SPE on equil path NASH assume sim player cant do given given how other played
82
for multi pd SN is
greater pn+1
83
for full info asym game 2 choice are
high-cost>alt and low = alt
84
asym profit with and without info for project completion
without = P*(profit-cost high)+ P*(profit 2- cost low) with= p*profit+p2*(proft) - cost
85
IC set up by
must not be temptted to take high Nh and high priced contract when knwo cost are low
86
which 2 constraint to consider
1- low cost IC and high cost PC low cost participation is automatically satisfied when other constraints are held  2. high cost firm will never pretend to be low cost
87
assurance
An assurance game is a type of game in game theory that focuses on situations where cooperation between players leads to a better outcome, but cooperation only occurs if there is mutual assurance that others will also cooperate

Bus 307 final (2 decks)

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