subject: game of theory . some questions here. anyone solve this?

1. In 1988, Nintendo sold 33 million cartridges, but the market could have absorbed 45 million. The pie shrank a little as some stores sold out of the game. As Nintendo-mania took hold, consumers queued up outside stores and retailers clamored for more of the product. With games in short supply, Nintendo had zapped the buyers power. Nintendo sold its games to a highly concentrated market predominantly megaretailers such as Toys R Us and Wal-Mart. (5 points)

(i)players

(ii)added values

(iii)rules

(iv)tactics

(v)scope

2. New York Post had raised to 50 cents, and the Daily News had held at 40 cents. As a result, the Post was losing subscribers and, with them, advertising revenue. New York Post was test-marketing a price cut to 25 cents and had demonstrated its effectiveness on Staten Island. As a result, sales of the Post doubled. The Daily News learned that its readers were remarkably willing to read the Post in order to save 15 cents. In 1994, the Daily News raised its price from 40 cents to 50 cents. (5 points)

(i)players

(ii)added values

(iii)rules

(iv)tactics

(v)scope

3. Sega introduced a new 16-bit system to the U.S. market. It took two years before Nintendo responded with its own 16-bit machine. If Nintendo had jumped into the game, it would have meant competition and, hence, lower 16-bit prices. By staying out of Segas way, Nintendo made a calculated trade-off: Give up a piece of the 16-bit action in order to extend the life of the 8-bit market. (5 points)

(i)players

(ii)added values

(iii)rules

(iv)tactics

(v)scope

4. It means that a subject without information tries to find a commitment on the properties and actions of a subject with information, and it means that it filters out subjects that have certain properties or commit certain actions. Asking for a job application is to filter out those who really want to work for the company from those who want to apply for once. (5 points)

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5. It arises on markets where there is information asymmetry between buyer and seller and where the overall quality of goods and services offered is reflected to the entire group of sellers rather than on individual sellers. In the used car market, the seller has more information regarding the true value of the vehicle than the buyer. This results in the buyer not wanting to pay more than the average price of the car, even if it is of premium quality. (5 points)

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6. It is a conflict in priorities between a person or group and the representative authorized to act on their behalf. It can occur in any situation in which the ownership of an asset delegates direct control over that asset to another party. A company's stock investors, as part-owners, rely on the company's chief executive officer (CEO) to carry out a strategy in their best interests. If the CEO opts instead to plow all the profits into expansion, the investors may feel they have been let down by CEO. (5 points)

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7. The problem arises that the principal can't trust the agent, so the agent has to make the principal trust it. So the agent delivers reliable information to the principal.In the job market, there is often an 'information asymmetry' between job seekers and recruiter. It is difficult for companies to judge the competency of applicants in the job market. Accurate identification takes time and money. Instead, the company uses a method of estimating the competency of applicants based on signs such as academic background and qualifications. Conversely, job seekers use signage as a sign of their abilities. (5 points)

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8. It is a situation in which one party gets involved in a risky event knowing that it is protected against the risk and the other party will incur the cost. It is the tendency to take more risk because the person taking the risk does not pay the cost of taking the risk. A car driver may drive faster knowing that the damage on their car will be covered by the insurance company if they get in an accident. (5 points)

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9.Pre-commitment is one way to solve the chicken game. Which of the following statements about pre-commitment is CORRECT? (5 points)

(i)It has no effect if the other party is informed of the information I committed.

(ii)It is a strategic thinking that creates a situation in which the other party has no choice but to make concessions, informs them later, and obtains concessions from the other party.

(iii)In some cases, adopting a seemingly favorable strategy to commit an action is effective in building trust in the commit.

(iv)It is important to understand each other's information structure, such as how much you know each other and how much you know that the other knows.

10. Which of the following statements about chicken game solution is NOT correct? (5 points)

(i)If there is at least one company in the market that maintains a super-hard stance that is not afraid of the worst, it is difficult to become a winner in the chicken game.

(ii)The price-competitive chicken game occurs when there are differences between products.

(iii)Through repeated game, players learn how to avoid collisions and choose strategies to win all.

(iv)Under general conditions, the average payoffs in subgame-perfect equilibria of long finitely repeated versions of the game are very close to any average payoffs attainable in the infinitely repeated versions of the game.

11. Which of the following statements is CORRECT about trigger strategy? (5 points)

(i)If the discount rate is greater than the critical discount factor, the present is more important.

(ii)The higher the discount rate, the greater the present value.

(iii)If the discount rate is high, it is considered more valuable to cooperate and obtain high profits in the future than to betray and gain high profits right now.

(iv)Cooperation continues if the sum of the present value of profit at the time of cooperation and the value of the discounted future profit is smaller than that at the time of betrayal.

12. The following is an explanation of the solution of Prisoner's dilemma. What is NOT correct? (5 points)

(i)In finite repeated game, the end of the game is known, but when it is not known, game players have no reason to continue cooperation.

(ii)It is always better to betray than to act randomly. It's always better to be a tit-for-tat than to betray. It's better to be generous than to be in a hurry.

(iii)There is a possibility of achieving cooperation by a long-term relationship.

(iv)The fundamental problem with the Prisoner's Dilemma is that the profit comes from cleverly breaking an agreement.

13. Which of the following statements about implicit collusion is NOT correct? (5 points)

(i)Examples of cooperation within network reciprocity include cartels, collusion, and strategic alliances.

(ii)A method of adjusting production or prices by means other than direct communication is called implicit collusion.

(iii)The general method uses the form of 'signaling', which is not easily understood from the outside but can be recognized within the industry.

(iv)Implicit collusion is a stable strategy in the long run

14. Which of the following statements about Moral Hazard is NOT correct? (5 points)

(i)A moral hazard is a problem because it creates an efficient allocation of resources as people take unnecessary risks.

(ii)The sub-prime mortgage is one of the best examples of a possible moral hazard situation relating to the circumstances and actions that arose during the aftermath of the financial crisis/housing market crash of 2008.

(iii)The way to solve a moral hazard is to ensure that both parties are liable. So should one party increase the level of risk they take, those costs will also be imposed onto them.

(iv)Sales workers are paid on a performance-based basis, production workers are paid part-time, and office workers are paid fixed wages.

15. The following is an explanation of how a repeated game in a crude oil case can solve the Prisoner's dilemma. What is NOT correct? (10 points)

(i)When the game is repeated, there is a punishment in the game structure.

(ii)If each individual adopts a strategy of absolute dominance that maximizes his or her own interests, the outcome will be worse than if each individual adopts a strategy that minimizes his or her own interests.

(iii)It can be learned that such selfish behavior brings disadvantages to both countries in an infinitely repeated game with no fixed end.

(iv)The short-term benefits of betrayal are significantly smaller than the costs that follow.

(v)In order for cooperation to be possible, it must be a monopoly in which a small number of companies participate.

16. The following is a description of the asymmetry information game. What is NOT correct?

(i)In a moral hazard situation, the change in the behavior of one party occurs after the agreement has been made. In adverse selection, there is a lack of symmetric information prior to when the contract or deal is agreed upon.

(ii)Tirole demonstrated that the authority cannot compensate for its lack of information about the firms conditions by allowing it to choose from a menu of ingeniously constructed contracts. Regardless of the type of producer, he will choose the right kind of contract purely out of self-interest.

(iii)Lemons problem can be explained by adverse selection. From the buyers point of view, there is lack of knowledge on the features of the product or service and the real capabilities of the seller which may result in a wrong decision to select and leading to failure. From the sellers point of view, a wrong selection may result in the buyers dissatisfaction and eroding the reputation and consequently a drop of perceived quality.

(iv)Resolving a principal-agent problem may require changing the system of rewards in order to align priorities or improving the flow of information, or both. The principal is generally the only party who can or will correct the problem.

(v)Hyundai Motor Company's '10-10' strategy is a signaling cost to solve market failure due to adverse selection and Lemons problem. The reason for adopting the strategy of extending the warranty period, which incurs cost for improved quality, is because of information asymmetry. More information about the quality of a car is known by the car manufacturer than by the customer.

17. List five types of infinitely repeated games. (10 points)

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