ECO 6409
Game Theory Applied to Business Decisions
Midterms Exam Review (Qns & Ans)
2025
1. In a simultaneous game, what strategy should a player choose
if they have a dominant strategy?
- a) Random strategy
- b) Mixed strategy
- c) Dominant strategy
- d) Minimax strategy
- ANS: c) Dominant strategy
- Rationale: A dominant strategy is one that always yields a
better outcome for a player, regardless of the strategies chosen by
other players.
©/2025
,2. Which of the following best describes a Nash Equilibrium?
- a) A situation where one player has a superior strategy
- b) A situation where no player can benefit by changing their
strategy while the others keep theirs unchanged
- c) A situation where players cooperate to achieve the best
outcome
- d) A situation where both players have the same strategy
- ANS: b) A situation where no player can benefit by changing
their strategy while the others keep theirs unchanged
- Rationale: Nash Equilibrium occurs when each player's
strategy is optimal given the strategies of the other players.
3. In the context of game theory, what is a zero-sum game?
- a) A game where the total gain of all players is zero
- b) A game where one player's gain is another player's loss
- c) A game with no equilibrium
- d) A game where all players have identical strategies
- ANS: b) A game where one player's gain is another player's
loss
- Rationale: In zero-sum games, the total payoff for all players
remains constant, meaning one player's gain is exactly balanced
by the other player's loss.
©/2025
, Fill-in-the-Blank Questions
4. In a ______________, players make decisions simultaneously
and without knowledge of the other players' choices.
- ANS: simultaneous game
- Rationale: In simultaneous games, players decide on their
strategies at the same time without knowing the strategies of their
opponents.
5. The ______________ is a formal, mathematical representation
of a game that includes players, strategies, and payoffs.
- ANS: game matrix
- Rationale: A game matrix outlines the structure of the game,
detailing the possible strategies and outcomes for each player.
True/False Questions
6. The Prisoner's Dilemma is an example of a game where
cooperation leads to the best outcome for both players.
- ANS: True
©/2025
Game Theory Applied to Business Decisions
Midterms Exam Review (Qns & Ans)
2025
1. In a simultaneous game, what strategy should a player choose
if they have a dominant strategy?
- a) Random strategy
- b) Mixed strategy
- c) Dominant strategy
- d) Minimax strategy
- ANS: c) Dominant strategy
- Rationale: A dominant strategy is one that always yields a
better outcome for a player, regardless of the strategies chosen by
other players.
©/2025
,2. Which of the following best describes a Nash Equilibrium?
- a) A situation where one player has a superior strategy
- b) A situation where no player can benefit by changing their
strategy while the others keep theirs unchanged
- c) A situation where players cooperate to achieve the best
outcome
- d) A situation where both players have the same strategy
- ANS: b) A situation where no player can benefit by changing
their strategy while the others keep theirs unchanged
- Rationale: Nash Equilibrium occurs when each player's
strategy is optimal given the strategies of the other players.
3. In the context of game theory, what is a zero-sum game?
- a) A game where the total gain of all players is zero
- b) A game where one player's gain is another player's loss
- c) A game with no equilibrium
- d) A game where all players have identical strategies
- ANS: b) A game where one player's gain is another player's
loss
- Rationale: In zero-sum games, the total payoff for all players
remains constant, meaning one player's gain is exactly balanced
by the other player's loss.
©/2025
, Fill-in-the-Blank Questions
4. In a ______________, players make decisions simultaneously
and without knowledge of the other players' choices.
- ANS: simultaneous game
- Rationale: In simultaneous games, players decide on their
strategies at the same time without knowing the strategies of their
opponents.
5. The ______________ is a formal, mathematical representation
of a game that includes players, strategies, and payoffs.
- ANS: game matrix
- Rationale: A game matrix outlines the structure of the game,
detailing the possible strategies and outcomes for each player.
True/False Questions
6. The Prisoner's Dilemma is an example of a game where
cooperation leads to the best outcome for both players.
- ANS: True
©/2025
