- Mathematics and Game Theory
- Mathematics and Game Theory - Quizzes
- Game Theory in Economics and Finance
Game Theory in Economics and Finance
| Description: This quiz will test your knowledge of Game Theory in Economics and Finance. | |
| Number of Questions: 14 | |
| Created by: Aliensbrain Bot | |
| Tags: game theory economics finance |
What is the Nash equilibrium in a game?
-
The set of strategies for each player that results in the highest payoff for each player
-
The set of strategies for each player that results in the lowest payoff for each player
-
The set of strategies for each player that results in the same payoff for each player
-
The set of strategies for each player that results in the highest payoff for one player and the lowest payoff for the other player
The Nash equilibrium is the set of strategies for each player that results in the highest payoff for each player, given the strategies of the other players.
What is the Prisoner's Dilemma?
-
A game in which two players are better off cooperating with each other, but each player has an incentive to defect
-
A game in which two players are better off defecting from each other, but each player has an incentive to cooperate
-
A game in which two players are indifferent between cooperating and defecting
-
A game in which two players are better off cooperating with each other, and each player has an incentive to cooperate
The Prisoner's Dilemma is a game in which two players are better off cooperating with each other, but each player has an incentive to defect. This is because each player can get a higher payoff by defecting, regardless of what the other player does.
What is the Tragedy of the Commons?
-
A situation in which a shared resource is overused because each individual has an incentive to use it as much as possible
-
A situation in which a shared resource is underused because each individual has an incentive to conserve it
-
A situation in which a shared resource is used efficiently because each individual has an incentive to use it in a sustainable way
-
A situation in which a shared resource is used inefficiently because each individual has an incentive to use it in a way that benefits themselves at the expense of others
The Tragedy of the Commons is a situation in which a shared resource is overused because each individual has an incentive to use it as much as possible. This is because each individual can benefit from using the resource, but the costs of overuse are shared by all.
What is the Coase Theorem?
-
A theorem that states that if property rights are well-defined and transaction costs are zero, then the allocation of resources will be efficient, regardless of the initial distribution of property rights
-
A theorem that states that if property rights are not well-defined and transaction costs are positive, then the allocation of resources will be inefficient
-
A theorem that states that if property rights are well-defined and transaction costs are positive, then the allocation of resources will be efficient, but only if the initial distribution of property rights is efficient
-
A theorem that states that if property rights are not well-defined and transaction costs are zero, then the allocation of resources will be efficient
The Coase Theorem states that if property rights are well-defined and transaction costs are zero, then the allocation of resources will be efficient, regardless of the initial distribution of property rights. This is because the parties involved in a transaction will be able to bargain with each other until they reach an agreement that is mutually beneficial.
What is the principal-agent problem?
-
A problem that arises when the principal and the agent have different objectives
-
A problem that arises when the principal and the agent have different information
-
A problem that arises when the principal and the agent have different risk preferences
-
A problem that arises when the principal and the agent have different time horizons
The principal-agent problem arises when the principal and the agent have different objectives. This can lead to a conflict of interest, in which the agent may take actions that are in their own best interest, but not in the best interest of the principal.
What is adverse selection?
-
A situation in which one party to a transaction has more information than the other party
-
A situation in which one party to a transaction has less information than the other party
-
A situation in which both parties to a transaction have the same information
-
A situation in which neither party to a transaction has any information
Adverse selection is a situation in which one party to a transaction has more information than the other party. This can lead to a situation in which the party with more information is able to take advantage of the party with less information.
What is moral hazard?
-
A situation in which one party to a transaction can take actions that affect the other party, but the other party cannot observe those actions
-
A situation in which one party to a transaction can take actions that affect the other party, and the other party can observe those actions
-
A situation in which both parties to a transaction can take actions that affect the other party, but neither party can observe the other party's actions
-
A situation in which neither party to a transaction can take actions that affect the other party
Moral hazard is a situation in which one party to a transaction can take actions that affect the other party, but the other party cannot observe those actions. This can lead to a situation in which the party with the ability to take hidden actions takes actions that are in their own best interest, but not in the best interest of the other party.
What is the signaling game?
-
A game in which one player sends a signal to another player, and the other player must decide whether or not to believe the signal
-
A game in which one player sends a signal to another player, and the other player must decide how to respond to the signal
-
A game in which both players send signals to each other, and each player must decide whether or not to believe the other player's signal
-
A game in which both players send signals to each other, and each player must decide how to respond to the other player's signal
The signaling game is a game in which one player sends a signal to another player, and the other player must decide whether or not to believe the signal. The sender of the signal has private information that the receiver of the signal does not have, and the sender can use the signal to try to convince the receiver of something that is not true.
What is the bargaining game?
-
A game in which two players negotiate over the division of a pie
-
A game in which two players negotiate over the price of a good
-
A game in which two players negotiate over the terms of a contract
-
A game in which two players negotiate over the outcome of a dispute
The bargaining game is a game in which two players negotiate over the division of a pie. The pie is a fixed amount of resources, and the players must decide how to divide it between themselves. The players can either agree to a division of the pie, or they can disagree and walk away with nothing.
What is the ultimatum game?
-
A game in which one player proposes a division of a pie to another player, and the other player can either accept or reject the proposal
-
A game in which one player proposes a price for a good to another player, and the other player can either accept or reject the proposal
-
A game in which one player proposes the terms of a contract to another player, and the other player can either accept or reject the proposal
-
A game in which one player proposes the outcome of a dispute to another player, and the other player can either accept or reject the proposal
The ultimatum game is a game in which one player proposes a division of a pie to another player, and the other player can either accept or reject the proposal. If the other player accepts the proposal, then the pie is divided according to the proposal. If the other player rejects the proposal, then neither player gets any of the pie.
What is the centipede game?
-
A game in which two players take turns alternating between two actions, and the player who takes the last action wins the game
-
A game in which two players take turns alternating between two actions, and the player who takes the first action wins the game
-
A game in which two players take turns alternating between two actions, and the player who takes the second action wins the game
-
A game in which two players take turns alternating between two actions, and the player who takes the third action wins the game
The centipede game is a game in which two players take turns alternating between two actions, and the player who takes the last action wins the game. The game is played on a centipede, which is a long, thin board with a number of spaces on it. The players start at one end of the centipede, and they take turns moving their pieces one space at a time. The player who reaches the end of the centipede first wins the game.
What is the battle of the sexes?
-
A game in which two players have different preferences over two outcomes, and each player prefers the outcome that the other player does not prefer
-
A game in which two players have different preferences over two outcomes, and each player prefers the outcome that the other player prefers
-
A game in which two players have the same preferences over two outcomes, and each player prefers the outcome that the other player prefers
-
A game in which two players have the same preferences over two outcomes, and each player prefers the outcome that the other player does not prefer
The battle of the sexes is a game in which two players have different preferences over two outcomes, and each player prefers the outcome that the other player does not prefer. For example, one player might prefer to go to the movies, while the other player might prefer to go to a concert. If the players cannot communicate with each other, then they may end up going to different places, even though they would both prefer to go to the same place.
What is the stag hunt?
-
A game in which two players have different preferences over two outcomes, and each player prefers the outcome that the other player also prefers
-
A game in which two players have different preferences over two outcomes, and each player prefers the outcome that the other player does not prefer
-
A game in which two players have the same preferences over two outcomes, and each player prefers the outcome that the other player prefers
-
A game in which two players have the same preferences over two outcomes, and each player prefers the outcome that the other player does not prefer
The stag hunt is a game in which two players have different preferences over two outcomes, and each player prefers the outcome that the other player also prefers. For example, one player might prefer to hunt a stag, while the other player might prefer to hunt a rabbit. If the players can communicate with each other, then they can agree to hunt the stag, which is the outcome that both players prefer. However, if the players cannot communicate with each other, then they may end up hunting different animals, even though they would both prefer to hunt the stag.
What is the prisoner's dilemma?
-
A game in which two players have different preferences over two outcomes, and each player prefers the outcome that the other player does not prefer
-
A game in which two players have different preferences over two outcomes, and each player prefers the outcome that the other player also prefers
-
A game in which two players have the same preferences over two outcomes, and each player prefers the outcome that the other player prefers
-
A game in which two players have the same preferences over two outcomes, and each player prefers the outcome that the other player does not prefer
The prisoner's dilemma is a game in which two players have different preferences over two outcomes, and each player prefers the outcome that the other player does not prefer. For example, one player might prefer to confess to a crime, while the other player might prefer to remain silent. If both players confess, then they will both receive a long prison sentence. If both players remain silent, then they will both receive a short prison sentence. However, if one player confesses and the other player remains silent, then the player who confesses will receive a short prison sentence and the player who remains silent will receive a long prison sentence. Therefore, each player has an incentive to confess, even though they would both prefer to remain silent.