Module 4 Game Theory

16) Dominance increases the size of games by allowing additional strategies to be considered.

17) Game theory is the study of

A) how optimal strategies are formulated in conflict.

B) decisions and their consequences.

C) pure probability.

D) conditional probability.

E) None of the above

18) The saddle point in a payoff matrix is always the

A) largest number in its column and the largest number in its row.

B) largest number in its column and the smallest number in its row.

C) smallest number in its column and the largest number in its row.

D) smallest number in its column and the smallest number in its row.

E) None of the above

19) The minimax criterion is to

A) minimize one's maximum losses.

B) maximize one's maximum losses.

C) maximize one's minimum gains.

D) minimize one's minimum gains.

E) Both A and C are correct

20) Consider the following two-person game. The payoff for X is given in the table. X will always play strategy

Y1 Y2

X1 4 6

X2 1 -3

A) X1.

B) X2.

C) Y1.

D) Y2.

E) Not enough information given

21) Consider the following two-person game, and determine the saddle point if it exists.

Y1 Y2

X1 4 6

X2 2 -3

A) -3

B) 2

C) 4

D) 6

E) There is no saddle point

22) CleanClothes dry cleaners is opening a pick-up and delivery service. There is only one other dry cleaner that currently offers this service. To advertise, CleanClothes is considering either newspaper ads or attaching flyers to the doors of many local homes. The payoff for each of CleanClothes' potential strategies is given in the table below. What strategy will CleanClothes (X) play?

Y1 (newspaper ads) Y2 (flyers)

X1 (newspaper ads) 52 37

X2 (flyers) 26 18

A) X1

B) X2

C) Y1

D) Y2

E) Not enough information given

23) CleanClothes dry cleaners is opening a pick-up and delivery service. There is only one other dry cleaner that currently offers this service. To advertise, CleanClothes is considering either newspaper ads or attaching flyers to the doors of many local homes. The payoff for each of CleanClothes' potential strategies is given in the table below. What strategy will the existing dry cleaners (Y) play?

Y1 (newspaper ads) Y2 (flyers)

X1 (newspaper ads) 52 37

X2 (flyers) 26 18

A) X1

B) X2

C) Y1

D) Y2

E) Not enough information given

24) CleanClothes dry cleaners is opening a pick-up and delivery service. There is only one other dry cleaner that currently offers this service. To advertise, CleanClothes is considering either newspaper ads or attaching flyers to the doors of many local homes. The payoff for each of CleanClothes' potential strategies is given in the table below. What is the saddle point, if any, of this game?

Y1 (newspaper ads) Y2 (flyers)

X1 (newspaper ads) 52 37

X2 (flyers) 26 18

A) 37

B) 17

C) 16

D) 8

E) There is no saddle point

25) Bagles RUS is expanding into a high-growth suburban area. To promote business and lure customers from the competing Wer Bagel store, they are considering offering a free dozen bagels to the first 50 customers or radio advertisement. The payoff for Bagels RUS is given in the table below. What is Bagels RUS' (X) best strategy?

Y1 Y2

X1 3 6

X2 2 -2

A) X1

B) X2

C) Y1

D) Y2

E) None of the above