Midway University - BUSM 570

Use the following case from questions 11-17

1)Two siblings, Sarah and Tom are playing a simultaneous hit and tell game. Sarah can hit Tom or not and Tom can tattle on Sarah or not. Relative to no hitting and no tattling, if Sarah hits Tom, and he tattles they both experience a loss of 10. Not telling, gets Tom a bruise, a loss of 5 but Sarah gains 5. If he tattles untruthfully, he gets a gain of 5 and Sarah loses 5. If they get along, no one gets anything

If Sarah decides not to hit Tom, what would Tom's best response be

Select one:

1. Tell
2. Not tell
3. Run

4. Hide

Use the following case from questions 18-24

2. Two siblings, Bratty Brad and Mousey Mike are playing a simultaneous hit and tell game. Bratty Brad can hit Mousey Mike or not and Mousey Mike can tattle on Bratty Brad or not. Relative to no hitting and no tattling, if Bratty Brad hits Mousey Mike, and he tattles they both experience a loss of 10. Not telling, gets Mousey Mike a bruise, a loss of 5 but Bratty Brad gains 5. If he tattles untruthfully, Mousey Mike gets a gain of 5 and Bratty Brad loses 5. If they get along, no one gets anything

What would be the Nash equilibrium of this simultaneous game?

Select one:

1. Hit, Tell
2. Not hit, Tell

3. Hit, Not tell
4. Both B&C

Use the following case from questions 2-10

3. Irene's Dairy is deciding whether or not to enter the market for ice cream, currently monopolized by Mattie's Ice-cream. If it enters the market, Mattie's can either accommodate him and share his 10million in profits equally with Irene or fight him and cause a 5million loss for each in a price war.

What would be the profits for Mattie's Dairy in equilibrium if Irene does enter the market?

Select one:

1. 5 million loss
2. 5 million

3. 10 million
4. 20 million

Use the following case from questions 2-10

4. Irene's Dairy is deciding whether or not to enter the market for ice cream, currently monopolized by Mattie's Ice-cream. If it enters the market, Mattie's can either accommodate him and share his 10million in profits equally with Irene or fight him and cause a 5million loss for each in a price war.

What would the Nash equilibrium be in this sequential game?

Select one:

1. Enter, fight
2. Enter, Accommodate

3. Do not enter, Fight
4. Do not enter, Accommodate

Use the following case from questions 2-10

5. Irene's Dairy is deciding whether or not to enter the market for ice cream, currently monopolized by Mattie's Ice-cream. If it enters the market, Mattie's can either accommodate him and share his 10million in profits equally with Irene or fight him and cause a 5million loss for each in a price war.

If Mattie wants to discourage Irene from entering the market, what strategy should she follow?

Select one:

1. Threaten to always accommodate
2. Always accommodate

3. Threaten to always fight
4. All of the above

Use the following case from questions 2-10

6. Irene's Dairy is deciding whether or not to enter the market for ice cream, currently monopolized by Mattie's Ice-cream. If it enters the market, Mattie's can either accommodate him and share his 10million in profits equally with Irene or fight him and cause a 5million loss for each in a price war.

In a sequential game, given Mattie's best response function, what would Irene's best response be?

Select one:

1. Not enter the market
2. Enter the market

3. Fight
4. Run away

Use the following case from questions 2-10

7. Irene's Dairy is deciding whether or not to enter the market for ice cream, currently monopolized by Mattie's Ice-cream. If it enters the market, Mattie's can either accommodate him and share his 10million in profits equally with Irene or fight him and cause a 5million loss for each in a price war.

What would be the profits for Irene's Dairy in equilibrium?

Select one:

1. 5 million loss
2. 5 million

3. 10 million
4. 20 million

Use the following case from questions 39-44

8. A shoplifter and a security guard are playing a simultaneous game. If the shoplifter steals and the security guard is vigilant, the shoplifter gets caught she suffers a loss of 20, and the security guard gets a bonus worth 15. If the shoplifter steals and the security guard is not vigilant, she does not get caught and gains 15 and the guard loses 5. If the shoplifter does not steal and the guard is vigilant, the guard loses 3 for the effort, while the shoplifter gains nothing and if the shoplifter does not steal and the guard is not vigilant, neither gain anything

If the security guard is somehow certain that the shoplifter would not steal, his best response would be

Select one:

1. Being watchful
2. Sleeping on the job
3. Run

4. Hide

Answer: B

Use the following case from questions 45-49

9. Two roommates John and Joe are playing a simultaneous game of cleaning the apartment. If neither of them clean, the apartment gets filthy and both get a utility of 2. If John cleans and Joe doesn't, John gets a utility of 1 and Joe gets a utility of 4. If Joe cleans and John doesn't, Joe gets a utility of 1 and John gets a utility of 4 and if both clean up the apartment, they each get a utility of 3.

If the apartment owner can somehow see the effort of the each of the room mates and punishes with a loss of 5 to any room mate who doesn't clean, is that likely to lead to a more efficient outcome?

Select one:

1. No because they would have to clean against their will
2. Yes because now they would both get a utility of 3

3. No because neither of them like cleaning
4. No because filth is good