Problem 2 Characterize each of the following as a posttive-sum game, a zero-sum
ID: 1165324 • Letter: P
Question
Problem 2 Characterize each of the following as a posttive-sum game, a zero-sum game, or a negatve-surn game (complete the table). See pages 583-584. Characterization You play a card game in your dorm room with four other students. Each player brings $10 to the game to bet on the outcome, winner take all. Nation A has a comparative advantage in the production of Product X while Nation B has a comparative advantage in the production of Product Y. The two nations exchange the goods in a mutually beneficial transaction Two nations are Involved in a war with large losses of human lives and capital. Neither nation involved in the war is closer to its objective than it was before the war began.Explanation / Answer
A. Event: Zero-Sum game
Characterization: In game theory and economic theory, a zero-sum game is a mathematical representation of a situation in which each participant's gain or loss of utility is exactly balanced by the losses or gains of the utility of the other participants. The situation discussed here is also the one where each participants gain or loss in the card game is exactly balanced by the losses and gains of other participants of the game.
B. Event: Positive-sum game.
Characterization: Positive-sum game, in game theory, a term that refers to situations in which the total of gains and losses is greater than zero. A positive sum occurs when resources are somehow increased and an approach is formulated in which the desires and needs of all concerned are satisfied. Thus, if two nations are engaging in mutually beneficial transsactions, both the nations are gaining something and thus total of gains and losses would be greater than zero.
C. Event: Negative-sum game.
Characterization: The term negative-sum game describes situations in which the total of gains and losses is less than zero, and the only way for one party to maintain the status quo is to take something from another party. In the given situation, both the nations are in the lose-lose situation, neither of them is gaining anything. And it is clearly stated that neither of the two nations are closer to their objective of achieving anything from the war.
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