Multiple Choices 1.In which of the following game, pre-game talking is most like
ID: 1247931 • Letter: M
Question
Multiple Choices1.In which of the following game, pre-game talking is most likely to be helpful in leading the players to the Pareto optimal outcome?
a) Prisoner’s dilemma
b) Centipede game
c) Coordination game
2.Which of the following statement is NOT correct about the alternating offer bargaining game where player 1 is the first to make offer?
a) If the game has odd rounds, player 1 gets a higher payoff than player 2.
b) Player 1’s SPNE payoff depends on the discount factor if the game has more than one round.
c) The SPNE outcome is Pareto optimal.
d) Any possible outcome in the game is Pareto optimal.
e) None of the above.
Explanation / Answer
In the future, please post one question at a time. 1. The answer is C. A prisoner's dilemma will not be remedied by talking because each player will have an incentive to lie. This is called "cheap talk." This also happens in the Centipede game. The sub-optimal Nash equilibria in each game will still exist when players can converse. However, the coordination game is different because each player, given the chance to communicate, has incentives to tell the truth. For example, if we each agree to drive on the right side of the road (a classic coordination game), then I would be stupid to turn around and drive on the left side. Such a decision would harm both of us. 2. D is the correct answer... or E depending on what assumptions are made. Obviously, if the game has 1 round, player 1 will have an advantage because player two will have to take or leave the first offer. In a more general sense, the player making the offer last will have the advantage. This is obviously true. A higher discount rate will result in player 1 being averse to making offers that will be rejected in early rounds. The SPNE is Pareto optimal. I could offer a formal mathematical proof, but this is a multiple choice question. In general, subgame perfect Nash equilibria tend to be pareto optimal, although there are exceptions. D is obviously false. One possible outcome is for player 1 to offer the allocation (0,0) and for player 2 to accept. This would result in wasting whatever resources were available to bargain and would obviously be suboptimal. D is the correct answer. If the game forces players to allocate all resources, then all outcomes are suboptimal, but this assumption is not stated in the problem. You might ask your professor about this question. Ask him if you are supposed to assume that all resources get allocated. If he says yes, then the answer is E.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.