Question 1

Assume a Tit-for-Tat strategy is applied in a two-player repetition game with prisoners' dilemma. If the player gets extra payoff $10 for defecting once, given the extra loss of $12 in the next round of game, what is the minimum interest rate that makes the one-time defection beneficial?

Group of answer choices

(a) 20% v

(b) 3%

(c) 15%

(d) 2%

Question 2

Which of the following is not correct about writing procurement contracts?

Group of answer choices

(a) in a fixed price contract, the supplier's profit is fixed

(b) in a fixed price contract, the supplier has incentive to cut the cost v

(c) the supplier is better informed than the buyer.

(d) in a Cost-plus contract, the supplier has no incentive to cut the cost

Question 3

In a mechanism design to solve moral hazard, which of the following should always be considered?

Group of answer choices

(a) Participation constraints

(b) none of the listed choices

(c) incentive compatibility constraints

(d) both participation constraints and incentive compatibility constraints v

Question 4

A barber shop is selling a membership card. If you top up $1000 in the card, you can enjoy 15% for all the services. Which of the following is correct?

Group of answer choices

(a) all the listed choices v

(b) It attracts more local customers

(c) It is a discount for frequent customers.

(d) A customer with short term visit pass to Singapore will not use this membership card.

Question 5

In a game under prisoners' dilemma with infinite repetition, if the cooperation is based on Tit-for-tat strategy, which of the following statement is correct?

Group of answer choices

(a) the cooperation could fail if the interest rate is abnormal

(b) all the listed choices

(c) it is possible to defect once under certain settings

(d) it is possible to defect forever in some special cases