QUESTION 1

Which of the following is the solution concept for a sequential game:

	a.	find the dominant strategy for each player, if one exists
	b.	locate the outcome with the greatest possible net benefit for each player
	c.	the solution concept is provided by the phrase: look ahead, reason back
	d.	the solution concept is provided by the phrase: maximize your payoff, minimize the payoff of your opponent
	e.	both a and d are correct answers

1 points

QUESTION 2

Assume that 2 individuals, Dan and Bob, live in a country where people are strongly encouraged to remain in "lockdown" and not leave their home (due to a viral pandemic). Assume that as a result, our 2 players participate in a sequential game with the following strategies:

• Go outside (e.g. head to the park for a walk, or just to hang out and enjoy nature)
• Stay inside (e.g. stay in the house, watch TV or maybe even talk to your kids, spouse, etc)

We will assume that Dan is the first mover in this game, and that their payoffs provided as the Net Benefit these players derive from each of the four possible outcomes. The payoffs for our players are as follows:

• If both Dan and Bob go outside, then both players receive net benefit of 0
• If both Dan and Bob stay inside, then both players receive net benefit of 1
• If Dan goes outside and Bob stays inside, then Dan receives net benefit of 2, while Bob receives net benefit of -1
• If Bob goes outside and Dan stays inside, then Bob receives net benefit of 2, while Dan receives net benefit of -1

Question 2: what will be the outcome of this sequential game?

	a.	Dan and Bob will both go outside
	b.	Dan and Bob will both stay inside
	c.	Dan will go outside, and Bob will stay inside
	d.	Bob will go outside, and Dan will stay inside

1 points

QUESTION 3

Assume that we have 2 candidates participating in a local election (we will call them Candidate 1 and Candidate 2). As is often the case in all elections, candidates must decide upon an approach. That choice typically boils down to whether the candidate should run a nice (positive) campaign or a negative campaign that involves a lot of mudslinging. Let's assume that our candidates have the following 2 strategies:

• Nice (refuse to say negative things about your opponent, run positive ads, etc)
• Negative (say negative things about your opponent, run attack ads, etc)

Assume this is a sequential game with complete information, where the first mover is Candidate 1. Payoffs are expressed in terms of the voter support that these candidates receive from implementing a given strategy. We'll assume that there are 6 voters deciding between these candidates. We'll assume that each candidate prefers more voter support to less voter support. Let's say that the payoffs for our players are as follows:

• If both Candidate 1 and Candidate 2 choose Nice, then both get support of 3
• If both Candidate 1 and Candidate 2 choose Negative, then both get support of 2
• If Candidate 1 chooses Nice and Candidate 2 chooses Negative, then Candidate 1 gets support of 1, while Candidate 2 gets support of 5
• If Candidate 2 chooses Nice and Candidate 1 chooses Negative, then Candidate 2 gets support of 1, while Candidate 1 gets support of 5

Question 3: what will be the outcome of this sequential game?

	a.	Candidate 1 and Candidate 2 will both choose Nice
	b.	Candidate 1 and Candidate 2 will both choose Negative
	c.	Candidate 1 will choose Nice, and Candidate 2 will choose Negative
	d.	Candidate 1 will choose Negative, and Candidate 2 will choose Nice