Exercises
Explore how economists analyze strategic interactions among individuals, businesses, and other decision-makers. This quiz covers dominant strategies, best responses, Nash equilibrium, zero-sum games, mixed strategies, backward induction, repeated cooperation, credible threats, and Pareto efficiency. Questions include payoff matrices and game trees that develop practical skills for interpreting simultaneous and sequential games.
Answer the questions below and check the explanation for each answer.
0/11 answered
Auto audio on: the next questions will be read aloud when you click Continue.
Strategy A gives the row player a higher payoff than B whether the column player selects Left or Right. Therefore, A strictly dominates B.
At a Nash equilibrium, each player's strategy is a best response to the strategies of the others. No player benefits from a unilateral change.
Defection is each prisoner's best response to either action of the other prisoner. Consequently, mutual defection is the Nash equilibrium, despite mutual cooperation producing higher payoffs.
In a zero-sum game, the players' payoffs add to zero. Any gain received by one player is offset by an equal loss to the other.
When the row player chooses Up, the column player's payoff is 2 with Left and 4 with Right. Right is therefore the column player's best response.
Each player randomizes equally between the two strategies. A probability of 1/2 makes the opponent indifferent and prevents either player from exploiting a predictable pattern.
After entry, the incumbent prefers accommodation because 1 exceeds -1. Anticipating this response, the entrant enters because its payoff of 2 exceeds the payoff of 0 from staying out.
Cooperation is sustainable when 3/(1-δ) is at least 5 + δ/(1-δ). Simplifying gives 3 ≥ 5 - 4δ, so δ ≥ 1/2. Players must value future payoffs sufficiently.
A threat is credible only if executing it remains in the threatening player's interest when the decision point arrives. Otherwise, a rational opponent should not expect it to be carried out.
An outcome is Pareto efficient when no feasible alternative benefits at least one player without harming another. This differs from Nash equilibrium, which concerns unilateral deviations.
Stag-Stag and Hare-Hare are both pure-strategy Nash equilibria. At either outcome, neither player benefits from changing strategy alone.
Free CoursePrinciples of Microeconomics
5
(9)
20h41m
25 exercises
Free CourseFundamentals of Economy
5
(3)
1h53m
12 exercises
Free CourseMicroeconomics: Basic Economics Concepts
4.7
(3)
7h39m
50 exercises
Free CoursePrinciples of Macroeconomics
4.6
(5)
14h24m
15 exercises
Free CourseIntro to Economics
4.3
(3)
3h46m
26 exercises
Free CoursePrinciples of Macroeconomics
New
19h50m
29 exercises
Free CourseFinancial Markets
New
27h51m
23 exercises
Thousands of online courses in video, ebooks and audiobooks.
To test your knowledge during online courses
Generated directly from your cell phone's photo gallery and sent to your email
Download our app via QR Code or the links below:.
Carry knowledge in your pocket.
Download the Cursa app.
There are hundreds of free courses available, with a free certificate of completion that is saved in your mobile image gallery.
Download the app to access the Course Completion Certificate for Free.
+ 10 million
students
Free and Valid
Certificate
60 thousand free
exercises
4.8/5 rating in
app stores
Free courses in
video and ebooks