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Chapter 09 Test Bank
Student: _______________________________________________________________________________________
1. While everyone wants a clean environment, it can be very hard to achieve. An approach governments
could take to promote that outcome is to:
A. create social norms.
B. create and enforce strict laws and heavy fines.
C. influence individual's incentives.
D. All of these are ways governments can get the "green" behavior they want.
2. The prisoner's dilemma is a game of strategy:

A. in which people make rational choices that lead to a less-than-ideal result for all.
B. in which people make rational choices that lead to the ideal result for all.
C. that leads everyone to be as well off as possible without making another worse off.
D. that leads people to make irrational choices that lead to the ideal result for all.
3. To economists, games are:

A. just recreational pursuits like chess, Monopoly, or poker.
B. any situation in which players pursue strategies designed to achieve their goals.
C. situations in which individuals act against their own interest for fun.
D. None of these statements are true.
4. To economists, a game is:

A. any situation in which players pursue strategies designed to achieve their goals.
B. a trivial pursuit that should not be used to analyze the economy or its actors.
C. a way to simplify and minimize the true importance of situations like war.
D. All of these statements are true.
5. Economic games can be used to analyze decisions around which of the following situations?
A. War
B. Business
C. Environmental protection
D. All of these situations.
6. The study of how people behave strategically under different circumstances is called:
A. game theory.
B. game strategy.
C. strategy optimization.
D. strategy theory.
7. Game theory is:

A. the study of how people behave strategically under different circumstances.
B. used by economists to evaluate behavior in a variety of settings.
C. a useful tool in predicting strategic behavior.
8. Game theory is:

B. used to predict the winners of only certain types of strategic games.
C. used to evaluate the microeconomic choices that involve probabilities of different outcomes.
D. the study of games of chance like solitaire or betting on horse races.
9-1
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent
of McGraw-Hill Education.
9. When the trade-offs you face are determined by the choices someone else will make, behaving
rationally involves:
A. behaving strategically.
B. ignoring the behavior of other actors.
C. acting in a way to help others.
10. Behaving strategically:

A. means recognizing that the actions of others will affect the trade-offs you face, and acting accordingly.
B. is an essential part of game theory.
C. involves rational decision making.
11. Behaving strategically means:

A. evaluating decisions in which players act in their own self-interest, but the interplay of those decisions
does not exist.
B. acting to achieve a goal by withholding key information from the person with whom an exchange is
being made.
C. acting to achieve a goal by anticipating the interplay between your own and others' decisions.
D. evaluating the impact of your choices on an uninvolved third party.
12. When your outcomes depend on another's choices, asking __________________ is the key to good
decision making.
A. how will others respond
B. what the wants and constraints are of those involved
C. what the trade-offs are
D. why everyone isn't already doing it
13. All games involve which of the following?

A. Multiple players
B. Strategies
C. Payoffs
D. All games involve all of these things.

A. Rules
B. Chance events
C. Dice
D. Cards

A. Strategies
B. Someone to enforce the rules
C. Cards or dice
D. Full information

A. A predictable outcome
B. Payoffs
C. Full information
D. A game master
17. In games, rules:

A. define the actions that are allowed in a game.
B. need to be loosely adhered to in order to predict an outcome.
C. define the winners of a game.
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D. outline the wrong choices that could be made in a game.
18. In real life, people's behavior is constrained by:

A. laws of nature.
B. legislated rules of society.
C. costs of various actions.
D. All of these are rules that constrain people's behavior.
19. An example of a real-life rule that might constrain people's behavior is:
A. minimum wage legislation.
B. having 24 hours in a day.
C. the earth's limited supply of oil.
D. All of these are examples of real-life rules.
20. In games, strategies are:

A. the outcomes players want to achieve.
B. the same for everyone to achieve the same goal.
C. the plans of action that players follow to achieve their goals.
21. In games, the strategy to reach a particular goal:

A. is the same for everyone.
B. can be different for different players and still achieve the same goal.
C. should be similar to what others have chosen to reach the same goal.
D. has begun to be documented by economists.
22. In games:
A. there is only one strategy associated with each outcome.
B. there are several strategies that can achieve a single goal.
C. all strategies followed in one particular game should all be similar in order to be successful.
D. if one person's strategy is wildly different from those of others, he will typically come in first or last.
23. Payoffs are:

A. the rewards that come from particular actions.
B. always monetary.
C. things that are only enjoyed by the winner.
D. bribes made to gain some advantage unfairly during a game.
24. An example of a payoff in a game would be:

A. a salary.
B. winning an election.
C. having clean drinking water.
D. All of these are examples of payoffs.
25. In game theory, an example of a payoff could be:

A. being the first mover in a game.
B. sharing information with a select few that others aren't privy to.
C. monetary gains made by a player.
D. giving an advantage to only one player.
26. The prisoner's dilemma game can involve:

A. only two players.
B. more than two players.
C. multiple organizations.
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27. The prisoner's dilemma:
A. can be summarized in a payoff matrix.
B. can involve two players.
C. leads to a less-than-ideal outcome for all players.
28. The prisoner's dilemma can be summarized in:

A. a strategy matrix.
B. a strategy tree.
C. a decision matrix.
D. a flowchart.
29. A decision matrix:

A. summarizes the players, strategies, and payoffs associated with a game.
B. outlines the clear outcome of any strategy-based game.
C. shows only the decisions of one player.
D. is not useful in evaluating the strategic choices.
30. When a strategy is the best one to follow no matter what strategy other players choose, it is called a:
A. golden decision.
B. dominated strategy.
C. dominant strategy.
D. zero-sum strategy.
31. A dominant strategy is one:

A. that is the best one to follow, no matter what strategy other players choose.
B. in which a player is forced to choose given the rules of the game.
C. in which a player must choose, even though it does not optimize his outcome.
D. provides a player with the highest payoff in the game.
32. A dominant strategy:

A. exists in every game.
B. is the best one to follow no matter what strategy other players choose.
C. is always the same for all players of a game.
D. awards the highest achievable payoff in a game.
33. In the prisoner's dilemma game:

A. there is a dominant strategy for both players.
B. there is a dominant strategy for only one player.
C. there is no dominant strategy for either player.
D. there is a dominant strategy for a player depending on what the other player does.
34. In the prisoner's dilemma:

A. a dominant strategy exists for only one player.
B. a non-cooperative outcome is predicted.
C. a cooperative win-win outcome can be predicted.

A. a stable outcome is impossible.
B. only one player has a dominant strategy.
C. a stable outcome is possible.
D. a commitment strategy is needed to reach a stable outcome.

A. a cooperative strategy can lead to a more beneficial outcome for both players.
9-4
B. a noncooperative strategy will lead to a positive-positive outcome.
C. a stable outcome is impossible.
D. neither player has a dominant strategy.

A. neither player has a dominant strategy.
B. both players have a dominant strategy.
C. only one player will ever have a dominant strategy.
D. All of these may be true in a prisoner's dilemma game.
38. The prisoner's dilemma game can be used to describe

A. the game Rock Paper Scissors
B. why candidates in elections go negative.
C. how individuals acting in their self-interest leads to the best outcome overall.
D. a zero sum game.
39. The prisoner's dilemma game:

A. is a zero sum game.
B. is a game of chance.
C. is a game with no dominant strategies.
D. is a game with a stable equilibrium.

A. if players can communicate in advance, they will always cooperate.
B. if players can communicate in advance, they may still not cooperate.
C. will always choose to cooperate.
D. will only cooperate if they are trustworthy.
41. The players of prisoner's dilemma-type games:

A. would be much better off if they could cooperate.
B. have an incentive to never cooperate.
C. have a dominant strategy to never cooperate.
42.
The figure shown portrays a game using a:
9-5
A. decision tree.
B. decision matrix.
C. flowchart.
D. graph.
43.
The game in the figure shown is a version of:
A. the prisoner's dilemma.

B. the first-mover advantage.
C. a sequential game.
D. a repeated game.
44.
A. a sequential game.
9-6
B. a simultaneous game.
C. a cooperative game.
D. an ultimatum.
45.
According to the figure shown, if Nike charges a high price, then Adidas should:
A. charge a high price.

B. charge a low price.
C. leave the market.
D. give an ultimatum.
46.
According to the figure shown, if Adidas charges a low price, then Nike should:

B. leave the market.
C. charge a low price.
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47.
According to the figure shown, Nike:
A. has a dominant strategy to charge a high price.

B. does not have a dominant strategy.
C. will reach an optimum outcome by acting in its own self-interest.
D. has a dominant strategy to charge a low price.
48.
According to the figure shown, Adidas:
A. should charge a low price, regardless of what Nike chooses to do.

B. should charge a high price, regardless of what Nike chooses to do.
C. does not have a dominant strategy.
D. should take the first-mover advantage and charge a low price.
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49.
According to the figure shown:
A. there is no stable equilibrium to the game.

B. both players will act in their own self-interest and get a stable, but less than optimum, equilibrium.
C. both players will act in their own self-interest and get an optimum equilibrium that is stable.
D. both players have an incentive to charge a low price and undercut the competition.
50.
The stable outcome of the game in the figure shown will be:
A. Nike charges a high price, and Adidas charges a low price.

B. Nike charges a low price, and Adidas charges a high price.
C. Nike and Adidas both charge a low price.
D. Nike and Adidas both charge a high price.
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51.
The outcome of the game in the figure show predicts that Nike will earn profits of:
A. $2 million.
B. $4 million.
C. $10 million.
D. $15 million.
52.
If the players in the figure shown act in their own self-interest, then we know that Adidas will earn:
A. $2 million.
B. $8 million.
C. $6 million.
D. $10 million.
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53.
If Nike and Adidas are faced with the game in the figure shown, we can predict:
A. an outcome that is good for society and less than ideal for the companies.
B. an outcome that is less than ideal for society, but optimal for the companies.
C. that both will follow their dominant strategy and society will lose.
D. None of these is likely to happen.
54.
If Nike and Adidas are faced with the game in the figure, we can see that:
A. Nike has a dominant strategy, but Adidas does not.

B. Adidas has a dominant strategy, but Nike does not.
C. Neither company has a dominant strategy.
D. Both companies have a dominant strategy.
9-11
55.
This figure shows the payoffs involved when Sarah and Joe work on a school project together for a single
grade. They both will enjoy a higher grade when more effort is put into the project, but they also get
pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each
would get from the effort they individually put forth and the grade they jointly receive.
If Sarah and Joe are working on a project together and faced with the choices outlined in the figure
shown, we can predict the outcome will be that:
A. both Joe and Sarah put forth low effort.

B. Joe will put forth high effort, and Sarah will put forth low effort.
C. Joe will put forth low effort, and Sarah will put forth high effort.
D. both Joe and Sarah put forth high effort.
56.
9-12

D. a repeated game.
57.
D. an ultimatum.
58.
9-13
According to the figure shown, if Joe puts forth high effort, then Sarah should:
A. put forth high effort.

B. put forth low effort.
C. leave school.
59.
According to the figure shown, if Sarah puts forth low effort, then Joe should:

9-14
60.
According to the figure shown, Joe:
A. has a dominant strategy to put forth high effort.

C. has a dominant strategy to put forth low effort.
D. will reach an optimum outcome by acting in his own self-interest.
61.
9-15
According to the figure shown, Sarah:
A. should put forth low effort, regardless of what Joe chooses to do.
B. should put forth high effort, regardless of what Joe choose to do.
D. should take the first-mover advantage and put forth low effort.
62.

B. both will act in their own self-interest and get a stable, but less than optimum, equilibrium.
C. both will act in their own self-interest and get an optimum equilibrium that is stable.
D. both have incentive to put forth high effort.
63.
9-16
The outcome of the game in the figure shown will be:
A. Joe puts forth high effort and Sarah puts forth low effort.
B. Joe puts forth low effort and Sarah puts forth high effort.
C. Joe and Sarah both put forth low effort.
D. Joe and Sarah both put forth high effort.
64.
The outcome of the game in the figure shown predicts that Joe will earn utility of:
A. 5.
B. 7.
C. 9.
D. 13.
9-17
65.
If the players in the figure shown act in their own self-interest, then we know that Sarah will earn utility of:
A. 6.
B. 10.
C. 7.
D. 15.
66.
9-18
If Joe and Sarah are faced with the game in the figure shown, we can see that:
A. Joe has a dominant strategy, but Sarah does not.

B. Sarah has a dominant strategy, but Joe does not.
C. neither student has a dominant strategy.
D. both students have a dominant strategy.
67.
Assume that Joe and Sarah, from the figure shown, are also dating, in addition to working together on the
joint school project. Further assume that Joe is madly in love with Sarah, who is an excellent student.
Sarah tells Joe that she will break up with him if he does not put forth high effort on this project. This
future punishment by Sarah is an example of:
A. a commitment strategy.
B. an effort optimization strategy.
C. an ultimatum.
D. a bargaining strategy.
68. Games that don't have a dominant strategy:

A. do not have stable equilibrium outcomes.
B. may have stable equilibrium outcomes.
C. always have stable equilibrium outcomes.
D. don't exist; all games have at least one dominant strategy.
69. If there is no single strategy that is best regardless of other players’ behavior:
A. there is no dominant strategy.
B. the dominant strategy will be to defect.
C. a noncooperative equilibrium is the only possible outcome.
D. the game is called a Prisoners’ dilemma.
9-19
70.
This figure displays the choices and payoffs (company profits) of two music shops-MiiTunes and The
Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high
prices or to charge very low prices, in the hopes that a new business will not be able to make a profit at
such low prices. The Rock Shop is trying to decide whether or not it should enter the market and compete
with MiiTunes.
If MiiTunes and The Rock Shop are both in the music business and faced with the choices outlined in the
figure shown, we can predict the outcome will be that:
A. MiiTunes charges low prices and The Rock Shop does not enter.
B. MiiTunes charges high prices and The Rock Shop enters.
C. MiiTunes charges high prices and The Rock Shop does not enter.
D. MiiTunes charges low prices and The Rock Shop enters.
71.
with MiiTunes.
9-20
figure, we can predict the outcome will be that:
A. MiiTunes charges high prices and The Rock Shop does not enter.
B. there is more than one stable outcome to this game.
C. there is no stable outcome to this game.
D. None of these statements is true.
72.
with MiiTunes.
According to the figure, if MiiTunes charges low prices, The Rock Shop should:
A. enter the market and earn $4 million.

B. enter the market and lose $2 million.
C. not enter the market and earn $0.
D. It cannot be determined what The Rock Shop will do.
9-21
73.
with MiiTunes.
According to the figure, if The Rock Shop enters the market, MiiTunes should:

D. give an ultimatum to The Rock Shop.
74.
with MiiTunes.
9-22
According to the figure, MiiTunes:
A. has a dominant strategy to charge low prices.

C. has a dominant strategy to charge high prices.
D. has more than one dominant strategy.
75.
with MiiTunes.
According to the figure, The Rock Shop:
A. should enter the market, regardless of what MiiTunes chooses to do.

B. should not enter the market, regardless of what MiiTunes chooses to do.
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76.
with MiiTunes.
Given the dominant strategy of MiiTunes according to the figure, we can predict that The Rock Shop:
A. will enter and enjoy profits of $4 million.

B. will enter and lose $2 million.
C. will not enter and earn $0.
D. Their actions cannot be predicted because they do not have a dominant strategy.
77.
with MiiTunes.
9-24
The game between music stores in the figure shows us that:
A. only The Rock Shop has a dominant strategy, and so the outcome cannot be predicted.
B. only MiiTunes has a dominant strategy, and so the outcome cannot be predicted.
C. neither store has a dominant strategy, and so the outcome cannot be predicted.
78.
with MiiTunes.
If the two music stores are faced with the game in the figure, we can see that:
A. The Rock Shop has a dominant strategy, but MiiTunes does not.
B. MiiTunes has a dominant strategy, but The Rock Shop does not.
C. neither store has a dominant strategy.
D. both stores have a dominant strategy.
79. A noncooperative equilibrium is one in which:

A. the participants act independently, pursuing only their individual interests.
B. always results in a negative-negative outcome.
C. a dominant strategy exists for both players.
D. each player ignores the actions of the other players.
80. Games:
A. only have one outcome possible.
B. with noncooperative equilibriums are always negative-negative outcomes.
C. may have several stable outcomes.
D. must have a dominant strategy present to reach a stable equilibrium.
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81. Games:
A. will always have a dominant strategy.
B. are always zero sum.
C. will always have several stable outcomes.
D. None of the above are true.
82. Games:
A. only have one possible stable outcome.
B. may have noncooperative equilibriums that are positive-positive outcomes.
C. must have a dominant strategy present in order to reach an equilibrium.
83. Games with a noncooperative equilibrium:

A. always result in a negative-negative outcome.
B. always result in a positive-positive outcome.
C. can result in either a positive-positive or negative-negative outcome.
D. always result in a positive-negative outcome (zero-sum).
84. Games with a negative-negative outcome:

A. must have a noncooperative equilibrium.
B. are not necessarily the best outcome for the players involved.
C. result from players acting in their own self-interest.
85. Cooperative equilibriums:

A. are impossible to reach in real life.
B. never occur unless players act in their own self-interest.
C. never result in positive-positive outcomes.
D. can arise if a game is repeated.
86. A Nash equilibrium:

A. is reached when all players choose the best strategy they can, given the choices of all other players.
B. is a point in a game when no player has an incentive to change his or her strategy, given what the
other players are doing.
C. is a stable outcome of a game.
87. When all players in a game choose the best strategy they can, given the choices of all other players, it
is always a:
A. Nash equilibrium.
B. positive-positive outcome.
C. cooperative equilibrium.
D. negative-negative equilibrium.
88. Reaching a Nash equilibrium means that:

A. the outcome will be positive-positive.
B. a cooperative equilibrium has been reached.
C. the players have reached a stable outcome where neither would wish to change his strategy once he
finds out what the other player is doing.
D. the players have failed to reach a stable outcome because one player will always wish to change his
strategy once he finds out what the other player is doing.

A. a stable outcome has been reached.
B. there is no stable outcome to the game.
C. the players will never reach a positive-positive outcome.
9-26
D. each player has achieved their highest payoff in the game.
90. Once a Nash equilibrium has been found in a game:

B. the players have no incentive to change their choice.
C. the players always have an incentive to change their choice.
D. no one in the game can be made better off.
91. A commitment strategy is an agreement in which players agree to:

A. submit to a penalty in the future if they defect from a given strategy.
B. cooperate before the game begins.
C. cooperate in repeated games until someone defects.
D. None of these is a definition of a commitment strategy.
92. A commitment strategy can:

A. be used to change people's payoffs to gain cooperation.
B. allow players to reach a mutually beneficial equilibrium that would otherwise be difficult to maintain.
C. result in a positive-positive outcome.
93. For a commitment strategy to work:

A. the punishment must be so bad that it outweighs the incentive to defect in the game.
B. the punishment must occur immediately after the game is played.
C. both players must agree to a punishment.
D. no player may have a dominant strategy.
94. Cooperation in prisoner's dilemma-type games:

A. always benefits the players and the public.
B. always benefits the players, but does not always benefit the public.
C. doesn't always benefit the players, but always benefits the public.
D. doesn't always benefit the players or the public.
95. Reaching a positive-positive outcome through a commitment strategy:

A. will only benefit the players and will not serve public interest.
B. will not benefit anyone.
C. can benefit everyone.
D. will always benefit everyone.
96. When competing firms have a commitment strategy, it is called:

A. collusion.
B. competitive cooperation.
C. predatory pricing.
D. competition.
97. Collusion is a situation where businesses:

A. agree to cooperate, and the U.S. government works hard to encourage this behavior.
B. have noncooperative outcomes, because they compete outside the public eye.
C. agree to cooperate, and their behavior does not serve the public interest.
D. act in their own self-interest and ignore what the other businesses are doing.
98. Collusion:
A. occurs only when no dominant strategy is present.
B. is a cooperative outcome between competitors.
C. is observed, but economists cannot theoretically model it.
D. is a theoretical concept that is rarely observed.
9-27
99. When businesses cooperate and agree to hold prices high, it is called ____________, and when they
reach a noncooperative equilibrium it is called _______________.
A. collusion; competition
B. competition; collusion
C. commitment strategy; collusion
D. collusion; commitment strategy
100. Collusion:
A. rarely occurs in reality.
B. never occurs in reality.
C. has not occurred in the last hundred years or so, due to government policy outlawing it.
D. is a common problem in reality.
101. Economists call a game that is played more than once:

A. a repeated game.
B. collusion.
C. a commitment strategy.
D. cooperative price play.
102. Strategies and incentives:

A. work the same whether games are played once or repeated.
B. often work quite differently when games are repeated.
C. do not change when the game is repeated.
103. In repeated games:

A. players no longer need commitment strategies to reach a mutually beneficial equilibrium.
B. players will never reach a mutually beneficial equilibrium.
C. there are no dominant strategies.
D. negative-negative outcomes are the only outcomes possible.

A. a noncooperative outcome is more likely than in a single-round game.
B. cooperation never happens.
C. a cooperative outcome is more likely than in a single-round game.
D. players always cooperate and enjoy a mutually beneficial equilibrium.
105. Commitment strategies:

A. are not necessary to reach a mutually beneficial equilibrium in repeated games.
B. are always needed to reach a mutually beneficial equilibrium in single-round games.
C. usually fail to work.
D. are not observed in reality.
106. The tit-for-tat strategy is:

A. one in which a player in a repeated game takes the same action that his or her opponent did in the
preceding round.
B. one in which both players explicitly agree to compete in the first round of a repeated game, and if one
of them cooperates, the other will defect.
C. not effective in prisoner's dilemma type games.
107. The tit-for-tat strategy:

A. is not effective in repeated games.
B. is not possible in single-round games.
C. makes cooperation unlikely.
9-28
108. If each player responds by imitating the action of his opponent in the previous round of a repeating
game, the players are following a:
A. repeated cooperation agreement.
B. collusion plan.
C. commitment strategy.
D. tit-for-tat strategy.
109. If one player defects in a repeated game, and his opponent is following a tit-for-tat strategy, we can
predict the opponent will:
A. defect in the next round.
B. renegotiate.
C. cooperate and try to get his opponent to follow.
D. collude.
110. If you are following a tit-for-tat strategy in a repeated game, and your opponent makes a cooperative
move, you will:
A. collude.
B. make a cooperative move in the next round.
C. price compete.
D. defect.
111. Two players who are both playing tit-for-tat can quickly find their way toward:
A. lasting cooperation.
B. noncooperative outcomes for the remaining rounds.
C. a cycle of cooperation and noncooperation, similar to a business cycle.
112. For players in a repeated-play game to achieve cooperation:

A. the players must reach an explicit agreement to cooperate.
B. the players need not explicitly state an agreement to cooperate, but must publicly display a
commitment strategy.
C. there is no need to enter into public commitment strategies or explicit agreements.
D. there is no need for players to collude.
113. Explicit agreements between businesses to keep prices high:

A. are illegal.
B. are called collusion.
C. are not in the public's best interests.
114. Which of the following is a subtle way for a company to reassure their competitors that it is
committed to a tit-for-tat strategy?
A. Setting prices below cost
B. Price-matching guarantees
C. Collusion
D. Offering a commitment strategy
115. A key to gaining cooperative behavior in a repeated game is:

A. that the game must be repeated indefinitely.
B. there must be a definitive end to the game.
C. the players must commit to always acting in their own self-interest.
D. at least one player must have a dominant strategy.
116. When one player has to make a decision before the other player, the situation is called a:
A. commitment game.
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B. simultaneous game.
C. sequential game.
D. prisoner's dilemma.
117. In sequential games, an especially important part of strategic behavior is to:

A. "think backward, work forward."
B. "think forward, work backward."
C. "think forward, act backward."
D. "think backward, act forward."
118. The process of analyzing a problem in reverse-starting with the last choice, then the second-to-last
choice, and so on, to determine the optimal strategy-is called:
A. backward induction.
B. backward thinking.
C. forward thinking.
D. backward working.
119. Backward induction involves:

A. a process of analyzing a problem in reverse.
B. thinking forward and working backward.
C. starting with the last choice and working backward to determine an optimal strategy.
120. Backward induction is a useful tool for:

A. finding an optimal strategy in a sequential game.
B. analyzing the decisions in a prisoner's dilemma-type game.
C. finding an optimal strategy in a simultaneous game.
D. Backward induction is useful in any of these games.
121. A way to summarize the actions and payoffs of a sequential game is to use a:
A. decision matrix.
B. decision tree.
C. payoff tree.
D. flowchart.
122. Using a decision tree:

A. allows a player to see his optimal strategy in a simultaneous game.
B. can help identify the dominant strategies in a prisoner's dilemma-type game.
C. allows a player to see his optimal strategy in a sequential game.
D. can help define a binding commitment strategy.
123.
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This figure displays the choices being made by two coffee shops: Starbucks and Dunkin Donuts. Both
companies are trying to decide whether or not to expand in an area. The area can handle only one of
them expanding, and whoever expands will cause the other to lose some business. If they both expand,
the market will be saturated, and neither company will do well. The payoffs are the additional profits (or
losses) they will earn.
The game in the figure is shown using a:
A. decision tree.
B. decision matrix.
C. flowchart.
D. graph.
124.
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D. a repeated game.
125.
According to the figure shown, if Starbucks expands in the market, then Dunkin Donuts should:
A. also expand their business.

B. not expand.
C. give an ultimatum.
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126.
According to the figure shown, if Dunkin Donuts expands, then Starbucks should:

B. not expand.
127.
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According to the figure shown, Starbucks:
A. has a dominant strategy to expand.

B. has a dominant strategy not to expand.
C. has first-mover advantage.
D. should wait to see what Dunkin Donuts is going to do.
128.
According to the figure shown, Dunkin Donuts:
A. should expand, regardless of what Starbucks chooses to do.

B. should not expand, regardless of what Starbucks chooses to do.
D. does not have a dominant strategy.
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129.
A. Starbucks will expand and Dunkin Donuts will not.

B. Starbucks will not expand and Dunkin Donuts will.
C. Starbucks and Dunkin Donuts will both expand.
D. neither Starbucks nor Dunkin Donuts will expand.
130.
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The outcome of the game in the figure shown predicts that Starbucks will earn profits of:
A. $2 million.
B. $1 million.
C. $0 million.
D. $2 million.
131.
If the players in the figure shown act in their own self-interest, then we know that Dunkin Donuts will earn:
A. $2 million.
B. $1 million.
C. $2 million.
D. $0 million.
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132.
If Starbucks and Dunkin Donuts are faced with the game in the figure shown, we can see that:
A. Starbucks has a dominant strategy, but Dunkin Donuts does not.

B. Dunkin Donuts has a dominant strategy, but Starbucks does not.
C. neither company has a dominant strategy.
D. both companies have a dominant strategy.
133. A game with a first-mover advantage is one in which:

A. the player who chooses first gets a higher payoff than those who follow.
B. the player who chooses first gets to decide if a repeated game will start with cooperation from the
beginning.
C. the first player to move determines the payoffs for the rest of the game.
134. First-mover advantage is:

A. most advantageous in a prisoner's dilemma-type game.
B. very important in one-round sequential games.
C. likely to lead to a positive-positive outcome.
135. An ultimatum game is:

A. one in which one player makes an offer and the other player has the simple choice of whether to
accept or reject.
B. one in which one player makes an offer and the other player has the choice of whether to accept or
offer a counteroffer.
C. a repeated sequential game.
D. the only game played by unions in reality.
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136. An ultimatum game:
A. is a repeated game.
B. is a simultaneous move game.
C. is when one player makes an offer and the other has to accept or reject.
D. is a realistic way of modeling union negotiations.

A. more important in a repeated game than in a sequential game.
B. more important in a repeated sequential game than in a one-round sequential game.
C. more important to those who have less to bargain with.
D. more important in an ultimatum game than in a repeated game.
138. Repeated play can change the outcome in sequential games by:
A. reducing the first-mover advantage.
B. removing the incentive to cooperate.
C. making collusion more probable.
D. increasing the incentive to defect.
139. The ability to make counteroffers transforms bargaining from a game in which ___________ trumps
everything to a game in which ____________ is the winning strategy.
A. patience; first-mover advantage
B. commitment strategy; self-interested behavior
C. first-mover advantage; patience
D. first-mover advantage; cooperation
140. ___________ is a winning strategy in a game of bargaining.

A. First-mover advantage
B. Patience
C. Cooperation
D. Self-interested behavior
141. In a game of bargaining, those who _______________ will likely get the highest payoff.
A. are patient
B. are cooperative
C. have a commitment strategy
D. collude
142. In a game of bargaining, the player who is willing to:

A. be cooperative has more bargaining power and so receives a worse payoff.
B. hold out longer has more bargaining power and so receives a worse payoff.
C. hold out longer has more bargaining power and so receives a better payoff.
D. make the first move has more bargaining power and so receives a better payoff.
143. In the real world, it is likely that wage negotiations:

A. drag on for years to see which side is more patient.
B. often end with the company enjoying a larger payoff, since they can afford to be more patient.
C. often end with the worker's enjoying a larger payoff, since they are not losing as much in profit as the
company.
D. do not drag on for years.
144. In the real world, wage negotiations typically do not drag on for years:
A. because the company can simply offer the split that would eventually occur if the two sides played all
the rounds.
B. because neither a company nor employees can afford to not work for that long.
C. unless the employees play an ultimatum game using a union to negotiate.
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145. Using a commitment strategy in:
A. a simultaneous game can alter payoffs, but has no effect in sequential games.
B. a simultaneous game has no effect, but can alter the payoffs and outcome of sequential games.
C. either a simultaneous or sequential game has little impact on payoffs or outcome.
D. either a simultaneous or sequential game can greatly alter the payoffs and outcome of the game.
146. By committing to reduce one's options during a sequential game, a player can force a change in his
opponents' strategy, and that commitment strategy results in a:
A. payoff that he likely would have gotten anyway.
B. cooperative equilibrium.
C. payoff that would otherwise be out of reach.
D. negative-negative outcome.
147. The famous historical example of the commitment strategy used by Cortes against the Aztecs is
sometimes referred to as:
A. "burning your boats."
B. "burning your bridges."
C. "friendly fire."
D. "putting all your eggs in one basket."
Chapter 09 Test Bank KEY

1. While everyone wants a clean environment, it can be very hard to achieve. An approach governments
could take to promote that outcome is to:
A. create social norms.
B. create and enforce strict laws and heavy fines.
C. influence individual's incentives.
D. All of these are ways governments can get the "green" behavior they want.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 09-01 Understand strategic behavior and describe the components of a strategic game.
Topic: Game Theory
2. The prisoner's dilemma is a game of strategy:

A. in which people make rational choices that lead to a less-than-ideal result for all.
B. in which people make rational choices that lead to the ideal result for all.
C. that leads everyone to be as well off as possible without making another worse off.
D. that leads people to make irrational choices that lead to the ideal result for all.
Blooms: Understand
Topic: Game Theory
Topic: Prisoners Dilemma
3. To economists, games are:

A. just recreational pursuits like chess, Monopoly, or poker.
B. any situation in which players pursue strategies designed to achieve their goals.
C. situations in which individuals act against their own interest for fun.
D. None of these statements are true.
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Blooms: Understand
Topic: Game Theory
4. To economists, a game is:

A. any situation in which players pursue strategies designed to achieve their goals.
B. a trivial pursuit that should not be used to analyze the economy or its actors.
C. a way to simplify and minimize the true importance of situations like war.
Blooms: Understand
Topic: Game Theory
5. Economic games can be used to analyze decisions around which of the following situations?
A. War
B. Business
C. Environmental protection
D. All of these situations.
Blooms: Understand
Topic: Game Theory
6. The study of how people behave strategically under different circumstances is called:
A. game theory.
B. game strategy.
C. strategy optimization.
D. strategy theory.
Blooms: Understand
Topic: Game Theory
7. Game theory is:

B. used by economists to evaluate behavior in a variety of settings.
C. a useful tool in predicting strategic behavior.
Blooms: Understand
Topic: Game Theory
8. Game theory is:

B. used to predict the winners of only certain types of strategic games.
C. used to evaluate the microeconomic choices that involve probabilities of different outcomes.
D. the study of games of chance like solitaire or betting on horse races.
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Blooms: Understand
Topic: Game Theory
9. When the trade-offs you face are determined by the choices someone else will make, behaving
rationally involves:
A. behaving strategically.
B. ignoring the behavior of other actors.
C. acting in a way to help others.
Blooms: Understand
Topic: Game Theory
10. Behaving strategically:

A. means recognizing that the actions of others will affect the trade-offs you face, and acting accordingly.
B. is an essential part of game theory.
C. involves rational decision making.
Blooms: Understand
Topic: Game Theory
11. Behaving strategically means:

A. evaluating decisions in which players act in their own self-interest, but the interplay of those decisions
does not exist.
B. acting to achieve a goal by withholding key information from the person with whom an exchange is
being made.
C. acting to achieve a goal by anticipating the interplay between your own and others' decisions.
D. evaluating the impact of your choices on an uninvolved third party.
Blooms: Understand
Topic: Game Theory
12. When your outcomes depend on another's choices, asking __________________ is the key to good
decision making.
A. how will others respond
B. what the wants and constraints are of those involved
C. what the trade-offs are
D. why everyone isn't already doing it
Blooms: Understand
Topic: Game Theory

A. Multiple players
B. Strategies
C. Payoffs
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D. All games involve all of these things.
Blooms: Understand
Topic: Game Theory

A. Rules
B. Chance events
C. Dice
D. Cards
Blooms: Understand
Topic: Game Theory

A. Strategies
B. Someone to enforce the rules
C. Cards or dice
D. Full information
Blooms: Understand
Topic: Game Theory

A. A predictable outcome
B. Payoffs
C. Full information
D. A game master
Blooms: Understand
Topic: Game Theory
17. In games, rules:

A. define the actions that are allowed in a game.
B. need to be loosely adhered to in order to predict an outcome.
C. define the winners of a game.
D. outline the wrong choices that could be made in a game.
Blooms: Understand
Topic: Game Theory
18. In real life, people's behavior is constrained by:

A. laws of nature.
B. legislated rules of society.
C. costs of various actions.
D. All of these are rules that constrain people's behavior.
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Blooms: Understand
Topic: Game Theory
19. An example of a real-life rule that might constrain people's behavior is:
A. minimum wage legislation.
B. having 24 hours in a day.
C. the earth's limited supply of oil.
D. All of these are examples of real-life rules.
Blooms: Understand
Topic: Game Theory
20. In games, strategies are:

A. the outcomes players want to achieve.
B. the same for everyone to achieve the same goal.
C. the plans of action that players follow to achieve their goals.
Blooms: Understand
Topic: Game Theory
21. In games, the strategy to reach a particular goal:

A. is the same for everyone.
B. can be different for different players and still achieve the same goal.
C. should be similar to what others have chosen to reach the same goal.
D. has begun to be documented by economists.
Blooms: Understand
Topic: Game Theory
22. In games:
A. there is only one strategy associated with each outcome.
B. there are several strategies that can achieve a single goal.
C. all strategies followed in one particular game should all be similar in order to be successful.
D. if one person's strategy is wildly different from those of others, he will typically come in first or last.
Blooms: Understand
Topic: Game Theory
23. Payoffs are:

A. the rewards that come from particular actions.
B. always monetary.
C. things that are only enjoyed by the winner.
D. bribes made to gain some advantage unfairly during a game.
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Blooms: Understand
Topic: Game Theory
24. An example of a payoff in a game would be:

A. a salary.
B. winning an election.
C. having clean drinking water.
D. All of these are examples of payoffs.
Blooms: Understand
Topic: Game Theory
25. In game theory, an example of a payoff could be:

A. being the first mover in a game.
B. sharing information with a select few that others aren't privy to.
C. monetary gains made by a player.
D. giving an advantage to only one player.
Blooms: Understand
Topic: Game Theory
26. The prisoner's dilemma game can involve:

A. only two players.
B. more than two players.
C. multiple organizations.
Blooms: Understand
Learning Objective: 09-02 Explain why noncooperation is a dominant strategy in the prisoners' dilemma.
27. The prisoner's dilemma:

A. can be summarized in a payoff matrix.
B. can involve two players.
C. leads to a less-than-ideal outcome for all players.
Blooms: Understand
28. The prisoner's dilemma can be summarized in:

A. a strategy matrix.
B. a strategy tree.
C. a decision matrix.
D. a flowchart.
Blooms: Understand
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29. A decision matrix:

A. summarizes the players, strategies, and payoffs associated with a game.
B. outlines the clear outcome of any strategy-based game.
C. shows only the decisions of one player.
D. is not useful in evaluating the strategic choices.
Blooms: Understand
30. When a strategy is the best one to follow no matter what strategy other players choose, it is called a:
A. golden decision.
B. dominated strategy.
C. dominant strategy.
D. zero-sum strategy.
Blooms: Understand
31. A dominant strategy is one:

A. that is the best one to follow, no matter what strategy other players choose.
B. in which a player is forced to choose given the rules of the game.
C. in which a player must choose, even though it does not optimize his outcome.
D. provides a player with the highest payoff in the game.
Blooms: Understand
32. A dominant strategy:

A. exists in every game.
B. is the best one to follow no matter what strategy other players choose.
C. is always the same for all players of a game.
D. awards the highest achievable payoff in a game.
Blooms: Understand

A. there is a dominant strategy for both players.
B. there is a dominant strategy for only one player.
C. there is no dominant strategy for either player.
D. there is a dominant strategy for a player depending on what the other player does.
Blooms: Understand
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34. In the prisoner's dilemma:

A. a dominant strategy exists for only one player.
B. a non-cooperative outcome is predicted.
C. a cooperative win-win outcome can be predicted.
Blooms: Understand

B. only one player has a dominant strategy.
C. a stable outcome is possible.
D. a commitment strategy is needed to reach a stable outcome.
Blooms: Understand

A. a cooperative strategy can lead to a more beneficial outcome for both players.
B. a noncooperative strategy will lead to a positive-positive outcome.
C. a stable outcome is impossible.
D. neither player has a dominant strategy.
Blooms: Understand

A. neither player has a dominant strategy.
B. both players have a dominant strategy.
C. only one player will ever have a dominant strategy.
D. All of these may be true in a prisoner's dilemma game.
Blooms: Understand
38. The prisoner's dilemma game can be used to describe

A. the game Rock Paper Scissors
B. why candidates in elections go negative.
C. how individuals acting in their self-interest leads to the best outcome overall.
D. a zero sum game.
Blooms: Understand
9-46
39. The prisoner's dilemma game:
A. is a zero sum game.
B. is a game of chance.
C. is a game with no dominant strategies.
D. is a game with a stable equilibrium.
Blooms: Understand

A. if players can communicate in advance, they will always cooperate.
B. if players can communicate in advance, they may still not cooperate.
C. will always choose to cooperate.
D. will only cooperate if they are trustworthy.
Blooms: Understand
41. The players of prisoner's dilemma-type games:

A. would be much better off if they could cooperate.
B. have an incentive to never cooperate.
C. have a dominant strategy to never cooperate.
Blooms: Understand
42.
The figure shown portrays a game using a:
A. decision tree.
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B. decision matrix.
C. flowchart.
D. graph.
Blooms: Understand
Topic: Decision Matrix
43.

D. a repeated game.
Blooms: Understand
44.
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D. an ultimatum.
Blooms: Understand
45.
According to the figure shown, if Nike charges a high price, then Adidas should:

Blooms: Understand
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46.
According to the figure shown, if Adidas charges a low price, then Nike should:

B. leave the market.
C. charge a low price.
Blooms: Understand
47.
According to the figure shown, Nike:
A. has a dominant strategy to charge a high price.

C. will reach an optimum outcome by acting in its own self-interest.
D. has a dominant strategy to charge a low price.
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Blooms: Understand
48.
According to the figure shown, Adidas:
A. should charge a low price, regardless of what Nike chooses to do.

B. should charge a high price, regardless of what Nike chooses to do.
D. should take the first-mover advantage and charge a low price.
Blooms: Understand
49.
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B. both players will act in their own self-interest and get a stable, but less than optimum, equilibrium.
C. both players will act in their own self-interest and get an optimum equilibrium that is stable.
D. both players have an incentive to charge a low price and undercut the competition.
Blooms: Understand
50.
The stable outcome of the game in the figure shown will be:
A. Nike charges a high price, and Adidas charges a low price.

B. Nike charges a low price, and Adidas charges a high price.
C. Nike and Adidas both charge a low price.
D. Nike and Adidas both charge a high price.
Blooms: Understand
51.
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The outcome of the game in the figure show predicts that Nike will earn profits of:
A. $2 million.
B. $4 million.
C. $10 million.
D. $15 million.
Blooms: Understand
52.
If the players in the figure shown act in their own self-interest, then we know that Adidas will earn:
A. $2 million.
B. $8 million.
C. $6 million.
D. $10 million.
Blooms: Understand
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53.
If Nike and Adidas are faced with the game in the figure shown, we can predict:
A. an outcome that is good for society and less than ideal for the companies.
B. an outcome that is less than ideal for society, but optimal for the companies.
C. that both will follow their dominant strategy and society will lose.
D. None of these is likely to happen.
Blooms: Understand
54.
If Nike and Adidas are faced with the game in the figure, we can see that:
A. Nike has a dominant strategy, but Adidas does not.

B. Adidas has a dominant strategy, but Nike does not.
C. Neither company has a dominant strategy.
D. Both companies have a dominant strategy.
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Blooms: Understand
55.
If Sarah and Joe are working on a project together and faced with the choices outlined in the figure
shown, we can predict the outcome will be that:
A. both Joe and Sarah put forth low effort.

B. Joe will put forth high effort, and Sarah will put forth low effort.
C. Joe will put forth low effort, and Sarah will put forth high effort.
D. both Joe and Sarah put forth high effort.
Blooms: Understand
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56.

D. a repeated game.
Blooms: Understand
57.
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D. an ultimatum.
Blooms: Understand
58.
According to the figure shown, if Joe puts forth high effort, then Sarah should:

C. leave school.
Blooms: Understand
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59.
According to the figure shown, if Sarah puts forth low effort, then Joe should:

Blooms: Understand
60.
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According to the figure shown, Joe:
A. has a dominant strategy to put forth high effort.

C. has a dominant strategy to put forth low effort.
D. will reach an optimum outcome by acting in his own self-interest.
Blooms: Understand
61.
According to the figure shown, Sarah:
A. should put forth low effort, regardless of what Joe chooses to do.
B. should put forth high effort, regardless of what Joe choose to do.
D. should take the first-mover advantage and put forth low effort.
Blooms: Understand
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62.

B. both will act in their own self-interest and get a stable, but less than optimum, equilibrium.
C. both will act in their own self-interest and get an optimum equilibrium that is stable.
D. both have incentive to put forth high effort.
Blooms: Understand
63.
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A. Joe puts forth high effort and Sarah puts forth low effort.
B. Joe puts forth low effort and Sarah puts forth high effort.
C. Joe and Sarah both put forth low effort.
D. Joe and Sarah both put forth high effort.
Blooms: Understand
64.
The outcome of the game in the figure shown predicts that Joe will earn utility of:
A. 5.
B. 7.
C. 9.
D. 13.
Blooms: Understand
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65.
If the players in the figure shown act in their own self-interest, then we know that Sarah will earn utility of:
A. 6.
B. 10.
C. 7.
D. 15.
Blooms: Understand
66.
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If Joe and Sarah are faced with the game in the figure shown, we can see that:
A. Joe has a dominant strategy, but Sarah does not.

B. Sarah has a dominant strategy, but Joe does not.
C. neither student has a dominant strategy.
D. both students have a dominant strategy.
Blooms: Understand
67.
Assume that Joe and Sarah, from the figure shown, are also dating, in addition to working together on the
joint school project. Further assume that Joe is madly in love with Sarah, who is an excellent student.
Sarah tells Joe that she will break up with him if he does not put forth high effort on this project. This
future punishment by Sarah is an example of:
A. a commitment strategy.
B. an effort optimization strategy.
C. an ultimatum.
D. a bargaining strategy.
Blooms: Understand
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68. Games that don't have a dominant strategy:

A. do not have stable equilibrium outcomes.
B. may have stable equilibrium outcomes.
C. always have stable equilibrium outcomes.
D. don't exist; all games have at least one dominant strategy.
Blooms: Remember
Difficulty: 01 Easy
Learning Objective: 09-03 Identify whether or not a player has a dominant strategy in a one-time game.
Topic: Dominant Strategy
69. If there is no single strategy that is best regardless of other players’ behavior:
A. there is no dominant strategy.
B. the dominant strategy will be to defect.
C. a noncooperative equilibrium is the only possible outcome.
D. the game is called a Prisoners’ dilemma.
Blooms: Remember
Difficulty: 01 Easy
70.
with MiiTunes.
figure shown, we can predict the outcome will be that:
A. MiiTunes charges low prices and The Rock Shop does not enter.
B. MiiTunes charges high prices and The Rock Shop enters.
C. MiiTunes charges high prices and The Rock Shop does not enter.
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D. MiiTunes charges low prices and The Rock Shop enters.
Blooms: Remember
Difficulty: 01 Easy
71.
with MiiTunes.
figure, we can predict the outcome will be that:
A. MiiTunes charges high prices and The Rock Shop does not enter.
B. there is more than one stable outcome to this game.
C. there is no stable outcome to this game.
Blooms: Remember
Difficulty: 01 Easy
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72.
with MiiTunes.
According to the figure, if MiiTunes charges low prices, The Rock Shop should:
A. enter the market and earn $4 million.

B. enter the market and lose $2 million.
C. not enter the market and earn $0.
D. It cannot be determined what The Rock Shop will do.
Blooms: Remember
Difficulty: 01 Easy
73.
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with MiiTunes.
According to the figure, if The Rock Shop enters the market, MiiTunes should:

D. give an ultimatum to The Rock Shop.
Blooms: Remember
Difficulty: 01 Easy
74.
with MiiTunes.
According to the figure, MiiTunes:
A. has a dominant strategy to charge low prices.

C. has a dominant strategy to charge high prices.
Blooms: Remember
Difficulty: 01 Easy
9-67
75.
with MiiTunes.
According to the figure, The Rock Shop:
A. should enter the market, regardless of what MiiTunes chooses to do.

B. should not enter the market, regardless of what MiiTunes chooses to do.
Blooms: Remember
Difficulty: 01 Easy
76.
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with MiiTunes.
Given the dominant strategy of MiiTunes according to the figure, we can predict that The Rock Shop:
A. will enter and enjoy profits of $4 million.

B. will enter and lose $2 million.
C. will not enter and earn $0.
D. Their actions cannot be predicted because they do not have a dominant strategy.
Blooms: Remember
Difficulty: 01 Easy
77.
with MiiTunes.
The game between music stores in the figure shows us that:
A. only The Rock Shop has a dominant strategy, and so the outcome cannot be predicted.
B. only MiiTunes has a dominant strategy, and so the outcome cannot be predicted.
C. neither store has a dominant strategy, and so the outcome cannot be predicted.
Blooms: Remember
Difficulty: 01 Easy
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78.
with MiiTunes.
If the two music stores are faced with the game in the figure, we can see that:
A. The Rock Shop has a dominant strategy, but MiiTunes does not.
B. MiiTunes has a dominant strategy, but The Rock Shop does not.
C. neither store has a dominant strategy.
D. both stores have a dominant strategy.
Blooms: Remember
Difficulty: 01 Easy
79. A noncooperative equilibrium is one in which:

A. the participants act independently, pursuing only their individual interests.
B. always results in a negative-negative outcome.
C. a dominant strategy exists for both players.
D. each player ignores the actions of the other players.
Blooms: Remember
Difficulty: 01 Easy
Learning Objective: 09-04 Identify whether or not a Nash equilibrium will be reached in a one-time game.
80. Games:
A. only have one outcome possible.
B. with noncooperative equilibriums are always negative-negative outcomes.
C. may have several stable outcomes.
D. must have a dominant strategy present to reach a stable equilibrium.
Blooms: Remember
9-70
Difficulty: 01 Easy
Topic: Game Theory
81. Games:
A. will always have a dominant strategy.
B. are always zero sum.
C. will always have several stable outcomes.
D. None of the above are true.
Blooms: Remember
Difficulty: 01 Easy
Topic: Game Theory
82. Games:
A. only have one possible stable outcome.
B. may have noncooperative equilibriums that are positive-positive outcomes.
C. must have a dominant strategy present in order to reach an equilibrium.
Blooms: Remember
Difficulty: 01 Easy
Topic: Game Theory
83. Games with a noncooperative equilibrium:

A. always result in a negative-negative outcome.
B. always result in a positive-positive outcome.
C. can result in either a positive-positive or negative-negative outcome.
D. always result in a positive-negative outcome (zero-sum).
Blooms: Remember
Difficulty: 01 Easy
Topic: Game Theory
84. Games with a negative-negative outcome:

A. must have a noncooperative equilibrium.
B. are not necessarily the best outcome for the players involved.
C. result from players acting in their own self-interest.
Blooms: Remember
Difficulty: 01 Easy
Topic: Game Theory
85. Cooperative equilibriums:

A. are impossible to reach in real life.
B. never occur unless players act in their own self-interest.
C. never result in positive-positive outcomes.
D. can arise if a game is repeated.
Blooms: Remember
Difficulty: 01 Easy
9-71
Topic: Game Theory
86. A Nash equilibrium:

A. is reached when all players choose the best strategy they can, given the choices of all other players.
B. is a point in a game when no player has an incentive to change his or her strategy, given what the
other players are doing.
C. is a stable outcome of a game.
Blooms: Remember
Difficulty: 01 Easy
Topic: Nash Equilibrium
87. When all players in a game choose the best strategy they can, given the choices of all other players, it
is always a:
A. Nash equilibrium.
B. positive-positive outcome.
C. cooperative equilibrium.
D. negative-negative equilibrium.
Blooms: Remember
Difficulty: 01 Easy

A. the outcome will be positive-positive.
B. a cooperative equilibrium has been reached.
C. the players have reached a stable outcome where neither would wish to change his strategy once he
finds out what the other player is doing.
D. the players have failed to reach a stable outcome because one player will always wish to change his
strategy once he finds out what the other player is doing.
Blooms: Remember
Difficulty: 01 Easy

A. a stable outcome has been reached.
B. there is no stable outcome to the game.
C. the players will never reach a positive-positive outcome.
D. each player has achieved their highest payoff in the game.
Blooms: Remember
Difficulty: 01 Easy
90. Once a Nash equilibrium has been found in a game:

B. the players have no incentive to change their choice.
C. the players always have an incentive to change their choice.
D. no one in the game can be made better off.
9-72
Blooms: Remember
Difficulty: 01 Easy
91. A commitment strategy is an agreement in which players agree to:

A. submit to a penalty in the future if they defect from a given strategy.
B. cooperate before the game begins.
C. cooperate in repeated games until someone defects.
D. None of these is a definition of a commitment strategy.
Blooms: Understand
Learning Objective: 09-05 Explain how a commitment strategy can be used to achieve cooperation in a one-time game.
Topic: Commitment Strategies
92. A commitment strategy can:

A. be used to change people's payoffs to gain cooperation.
B. allow players to reach a mutually beneficial equilibrium that would otherwise be difficult to maintain.
C. result in a positive-positive outcome.
Blooms: Understand
93. For a commitment strategy to work:

A. the punishment must be so bad that it outweighs the incentive to defect in the game.
B. the punishment must occur immediately after the game is played.
C. both players must agree to a punishment.
D. no player may have a dominant strategy.
Blooms: Understand
94. Cooperation in prisoner's dilemma-type games:

A. always benefits the players and the public.
B. always benefits the players, but does not always benefit the public.
C. doesn't always benefit the players, but always benefits the public.
D. doesn't always benefit the players or the public.
Blooms: Understand
95. Reaching a positive-positive outcome through a commitment strategy:

A. will only benefit the players and will not serve public interest.
B. will not benefit anyone.
C. can benefit everyone.
D. will always benefit everyone.
9-73
Blooms: Understand
96. When competing firms have a commitment strategy, it is called:

A. collusion.
B. competitive cooperation.
C. predatory pricing.
D. competition.
Blooms: Understand
97. Collusion is a situation where businesses:

A. agree to cooperate, and the U.S. government works hard to encourage this behavior.
B. have noncooperative outcomes, because they compete outside the public eye.
C. agree to cooperate, and their behavior does not serve the public interest.
D. act in their own self-interest and ignore what the other businesses are doing.
Blooms: Understand
98. Collusion:
A. occurs only when no dominant strategy is present.
B. is a cooperative outcome between competitors.
C. is observed, but economists cannot theoretically model it.
D. is a theoretical concept that is rarely observed.
Blooms: Understand
99. When businesses cooperate and agree to hold prices high, it is called ____________, and when they
reach a noncooperative equilibrium it is called _______________.
A. collusion; competition
B. competition; collusion
C. commitment strategy; collusion
D. collusion; commitment strategy
Blooms: Understand
100. Collusion:
A. rarely occurs in reality.
B. never occurs in reality.
C. has not occurred in the last hundred years or so, due to government policy outlawing it.
D. is a common problem in reality.
Blooms: Understand
9-74
101. Economists call a game that is played more than once:

A. a repeated game.
B. collusion.
C. a commitment strategy.
D. cooperative price play.
Blooms: Understand
Learning Objective: 09-06 Explain how repeated play can enable cooperation.
Topic: Repeated Games
102. Strategies and incentives:

A. work the same whether games are played once or repeated.
B. often work quite differently when games are repeated.
C. do not change when the game is repeated.
Blooms: Understand

A. players no longer need commitment strategies to reach a mutually beneficial equilibrium.
B. players will never reach a mutually beneficial equilibrium.
C. there are no dominant strategies.
D. negative-negative outcomes are the only outcomes possible.
Blooms: Understand

A. a noncooperative outcome is more likely than in a single-round game.
B. cooperation never happens.
C. a cooperative outcome is more likely than in a single-round game.
D. players always cooperate and enjoy a mutually beneficial equilibrium.
Blooms: Understand
105. Commitment strategies:

A. are not necessary to reach a mutually beneficial equilibrium in repeated games.
B. are always needed to reach a mutually beneficial equilibrium in single-round games.
C. usually fail to work.
D. are not observed in reality.
Blooms: Understand
9-75
106. The tit-for-tat strategy is:

A. one in which a player in a repeated game takes the same action that his or her opponent did in the
preceding round.
B. one in which both players explicitly agree to compete in the first round of a repeated game, and if one
of them cooperates, the other will defect.
C. not effective in prisoner's dilemma type games.
Blooms: Understand
107. The tit-for-tat strategy:

A. is not effective in repeated games.
B. is not possible in single-round games.
C. makes cooperation unlikely.
Blooms: Understand
108. If each player responds by imitating the action of his opponent in the previous round of a repeating
game, the players are following a:
A. repeated cooperation agreement.
B. collusion plan.
C. commitment strategy.
D. tit-for-tat strategy.
Blooms: Understand
109. If one player defects in a repeated game, and his opponent is following a tit-for-tat strategy, we can
predict the opponent will:
A. defect in the next round.
B. renegotiate.
C. cooperate and try to get his opponent to follow.
D. collude.
Blooms: Understand
110. If you are following a tit-for-tat strategy in a repeated game, and your opponent makes a cooperative
move, you will:
A. collude.
B. make a cooperative move in the next round.
C. price compete.
D. defect.
9-76
Blooms: Understand
111. Two players who are both playing tit-for-tat can quickly find their way toward:
A. lasting cooperation.
B. noncooperative outcomes for the remaining rounds.
C. a cycle of cooperation and noncooperation, similar to a business cycle.
Blooms: Understand
112. For players in a repeated-play game to achieve cooperation:

A. the players must reach an explicit agreement to cooperate.
B. the players need not explicitly state an agreement to cooperate, but must publicly display a
commitment strategy.
C. there is no need to enter into public commitment strategies or explicit agreements.
D. there is no need for players to collude.
Blooms: Understand
113. Explicit agreements between businesses to keep prices high:

A. are illegal.
B. are called collusion.
C. are not in the public's best interests.
Blooms: Understand
114. Which of the following is a subtle way for a company to reassure their competitors that it is
committed to a tit-for-tat strategy?
A. Setting prices below cost
B. Price-matching guarantees
C. Collusion
D. Offering a commitment strategy
Blooms: Understand
115. A key to gaining cooperative behavior in a repeated game is:

A. that the game must be repeated indefinitely.
B. there must be a definitive end to the game.
C. the players must commit to always acting in their own self-interest.
D. at least one player must have a dominant strategy.
9-77
Blooms: Understand
116. When one player has to make a decision before the other player, the situation is called a:
A. commitment game.
B. simultaneous game.
C. sequential game.
D. prisoner's dilemma.
Blooms: Understand
Learning Objective: 09-07 Explain how backward induction can be used to make decisions.
Topic: Sequential Games
117. In sequential games, an especially important part of strategic behavior is to:

A. "think backward, work forward."
B. "think forward, work backward."
C. "think forward, act backward."
D. "think backward, act forward."
Blooms: Understand
Topic: Backward Induction
118. The process of analyzing a problem in reverse-starting with the last choice, then the second-to-last
choice, and so on, to determine the optimal strategy-is called:
A. backward induction.
B. backward thinking.
C. forward thinking.
D. backward working.
Blooms: Understand
119. Backward induction involves:

A. a process of analyzing a problem in reverse.
B. thinking forward and working backward.
C. starting with the last choice and working backward to determine an optimal strategy.
Blooms: Understand
120. Backward induction is a useful tool for:

A. finding an optimal strategy in a sequential game.
B. analyzing the decisions in a prisoner's dilemma-type game.
C. finding an optimal strategy in a simultaneous game.
D. Backward induction is useful in any of these games.
9-78
Blooms: Understand
121. A way to summarize the actions and payoffs of a sequential game is to use a:
A. decision matrix.
B. decision tree.
C. payoff tree.
D. flowchart.
AACSB: Knowledge Application
Blooms: Apply
Difficulty: 03 Hard
Learning Objective: 09-08 Use a decision tree to solve a sequential game.
Topic: Decision Trees
122. Using a decision tree:

A. allows a player to see his optimal strategy in a simultaneous game.
B. can help identify the dominant strategies in a prisoner's dilemma-type game.
C. allows a player to see his optimal strategy in a sequential game.
D. can help define a binding commitment strategy.
Blooms: Apply
Difficulty: 03 Hard
123.
The game in the figure is shown using a:
9-79
A. decision tree.
B. decision matrix.
C. flowchart.
D. graph.
Blooms: Apply
Difficulty: 03 Hard
124.

D. a repeated game.
Blooms: Apply
Difficulty: 03 Hard
Topic: Sequential Games
9-80
125.
According to the figure shown, if Starbucks expands in the market, then Dunkin Donuts should:

B. not expand.
Blooms: Apply
Difficulty: 03 Hard
126.
9-81
According to the figure shown, if Dunkin Donuts expands, then Starbucks should:

B. not expand.
Blooms: Apply
Difficulty: 03 Hard
127.
According to the figure shown, Starbucks:
A. has a dominant strategy to expand.

B. has a dominant strategy not to expand.
D. should wait to see what Dunkin Donuts is going to do.
9-82
Blooms: Apply
Difficulty: 03 Hard
Topic: First Mover Advantage
128.
According to the figure shown, Dunkin Donuts:
A. should expand, regardless of what Starbucks chooses to do.

B. should not expand, regardless of what Starbucks chooses to do.
D. does not have a dominant strategy.
Blooms: Apply
Difficulty: 03 Hard
9-83
129.
A. Starbucks will expand and Dunkin Donuts will not.

B. Starbucks will not expand and Dunkin Donuts will.
C. Starbucks and Dunkin Donuts will both expand.
D. neither Starbucks nor Dunkin Donuts will expand.
Blooms: Apply
Difficulty: 03 Hard
130.
9-84
The outcome of the game in the figure shown predicts that Starbucks will earn profits of:
A. $2 million.
B. $1 million.
C. $0 million.
D. $2 million.
Blooms: Apply
Difficulty: 03 Hard
131.
If the players in the figure shown act in their own self-interest, then we know that Dunkin Donuts will earn:
A. $2 million.
B. $1 million.
C. $2 million.
D. $0 million.
9-85
Blooms: Apply
Difficulty: 03 Hard
132.
If Starbucks and Dunkin Donuts are faced with the game in the figure shown, we can see that:
A. Starbucks has a dominant strategy, but Dunkin Donuts does not.

B. Dunkin Donuts has a dominant strategy, but Starbucks does not.
C. neither company has a dominant strategy.
D. both companies have a dominant strategy.
Blooms: Apply
Difficulty: 03 Hard
133. A game with a first-mover advantage is one in which:

A. the player who chooses first gets a higher payoff than those who follow.
B. the player who chooses first gets to decide if a repeated game will start with cooperation from the
beginning.
C. the first player to move determines the payoffs for the rest of the game.
Blooms: Remember
Difficulty: 01 Easy
Learning Objective: 09-09 Define first-mover advantage and identify it in practice.
9-86
A. most advantageous in a prisoner's dilemma-type game.
B. very important in one-round sequential games.
C. likely to lead to a positive-positive outcome.
Blooms: Remember
Difficulty: 01 Easy
135. An ultimatum game is:

A. one in which one player makes an offer and the other player has the simple choice of whether to
accept or reject.
B. one in which one player makes an offer and the other player has the choice of whether to accept or
offer a counteroffer.
C. a repeated sequential game.
D. the only game played by unions in reality.
Blooms: Remember
Difficulty: 01 Easy
136. An ultimatum game:

A. is a repeated game.
B. is a simultaneous move game.
C. is when one player makes an offer and the other has to accept or reject.
D. is a realistic way of modeling union negotiations.
Blooms: Remember
Difficulty: 01 Easy

A. more important in a repeated game than in a sequential game.
B. more important in a repeated sequential game than in a one-round sequential game.
C. more important to those who have less to bargain with.
D. more important in an ultimatum game than in a repeated game.
Blooms: Remember
Difficulty: 01 Easy
138. Repeated play can change the outcome in sequential games by:
A. reducing the first-mover advantage.
B. removing the incentive to cooperate.
C. making collusion more probable.
D. increasing the incentive to defect.
Blooms: Understand
Learning Objective: 09-10 Explain why patient players have more bargaining power in repeated games.
Topic: Repeated Sequential Games
9-87
139. The ability to make counteroffers transforms bargaining from a game in which ___________ trumps
everything to a game in which ____________ is the winning strategy.
A. patience; first-mover advantage
B. commitment strategy; self-interested behavior
C. first-mover advantage; patience
D. first-mover advantage; cooperation
Blooms: Understand
140. ___________ is a winning strategy in a game of bargaining.

A. First-mover advantage
B. Patience
C. Cooperation
D. Self-interested behavior
Blooms: Understand
141. In a game of bargaining, those who _______________ will likely get the highest payoff.
A. are patient
B. are cooperative
C. have a commitment strategy
D. collude
Blooms: Understand
142. In a game of bargaining, the player who is willing to:

A. be cooperative has more bargaining power and so receives a worse payoff.
B. hold out longer has more bargaining power and so receives a worse payoff.
C. hold out longer has more bargaining power and so receives a better payoff.
D. make the first move has more bargaining power and so receives a better payoff.
Blooms: Understand
143. In the real world, it is likely that wage negotiations:

A. drag on for years to see which side is more patient.
B. often end with the company enjoying a larger payoff, since they can afford to be more patient.
C. often end with the worker's enjoying a larger payoff, since they are not losing as much in profit as the
company.
D. do not drag on for years.
Blooms: Understand
9-88
144. In the real world, wage negotiations typically do not drag on for years:
A. because the company can simply offer the split that would eventually occur if the two sides played all
the rounds.
B. because neither a company nor employees can afford to not work for that long.
C. unless the employees play an ultimatum game using a union to negotiate.
Blooms: Understand
145. Using a commitment strategy in:

A. a simultaneous game can alter payoffs, but has no effect in sequential games.
B. a simultaneous game has no effect, but can alter the payoffs and outcome of sequential games.
C. either a simultaneous or sequential game has little impact on payoffs or outcome.
D. either a simultaneous or sequential game can greatly alter the payoffs and outcome of the game.
Blooms: Understand
Learning Objective: 09-11 Explain how a commitment strategy can allow players to achieve their goals by limiting their options.
Topic: Commitment Strategies in Sequential Games
146. By committing to reduce one's options during a sequential game, a player can force a change in his
opponents' strategy, and that commitment strategy results in a:
A. payoff that he likely would have gotten anyway.
B. cooperative equilibrium.
C. payoff that would otherwise be out of reach.
D. negative-negative outcome.
Blooms: Understand
147. The famous historical example of the commitment strategy used by Cortes against the Aztecs is
sometimes referred to as:
A. "burning your boats."
B. "burning your bridges."
C. "friendly fire."
D. "putting all your eggs in one basket."
Blooms: Understand
Chapter 09 Test Bank Summary

# of Questi
Category
ons
AACSB: Knowledge Application 12
9-89
AACSB: Reflective Thinking 135
Accessibility: Keyboard Navigation 102
Blooms: Apply 12
Blooms: Remember 28
Blooms: Understand 107
Difficulty: 01 Easy 28
Difficulty: 02 Medium 108
Difficulty: 03 Hard 12
Learning Objective: 09-
25
01 Understand strategic behavior and describe the components of a strategic game.
43
02 Explain why noncooperation is a dominant strategy in the prisoners' dilemma.
11
03 Identify whether or not a player has a dominant strategy in a one-time game.
12
04 Identify whether or not a Nash equilibrium will be reached in a one-time game.
05 Explain how a commitment strategy can be used to achieve cooperation in a one- 10
time game.
Learning Objective: 09-06 Explain how repeated play can enable cooperation. 15
5
07 Explain how backward induction can be used to make decisions.
Learning Objective: 09-08 Use a decision tree to solve a sequential game. 12
Learning Objective: 09-09 Define first-mover advantage and identify it in practice. 5
7
10 Explain why patient players have more bargaining power in repeated games.
11 Explain how a commitment strategy can allow players to achieve their goals by limi 3
ting their options.
Topic: Backward Induction 9
Topic: Commitment Strategies 10
Topic: Commitment Strategies in Sequential Games 3
Topic: Decision Matrix 1
Topic: Decision Trees 3
Topic: Dominant Strategy 13
Topic: First Mover Advantage 6
Topic: Game Theory 31
Topic: Nash Equilibrium 5
Topic: Prisoners Dilemma 43
Topic: Repeated Games 15
9-90
Topic: Repeated Sequential Games 7
Topic: Sequential Games 2
9-91
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vessel sighted perplexed us; that our radio was useless.
Where were we? Should we keep faith with our course and
continue?
“Mess” epitomized the blackness of the moment. Were we
beaten?
We all favored sticking to the course. We had to. With faith lost in
that, it was hopeless to carry on. Besides, when last we checked it,
before the radio went dead, the plane had been holding true.
We circled the America, although having no idea of her identity at
the time. With the radio crippled, in an effort to get our position, Bill
scribbled a note. The note and an orange to weight it, I tied in a bag
with an absurd piece of silver cord. As we circled the America, the
bag was dropped through the hatch. But the combination of our
speed, the movement of the vessel, the wind and the lightness of the
missile was too much for our marksmanship. We tried another shot,
using our remaining orange. No luck.
U. S. Shipping Board
THE FRIENDSHIP “BOMBING” THE AMERICA
THE LAST PAGE IN THE LOG BOOK
Should we seek safety and try to come down beside the steamer?
Perhaps one reason the attempt was never attempted was the
roughness of the sea which not only made a landing difficult but a
take-off impossible.
Bill leaped to the radio with the hope of at least receiving a
message. At some moment in the excitement, before I closed the
hatch which opens in the bottom of the fuselage I lay flat and took a
photograph. This, I am told, is the first one made of a vessel at sea
from a plane in trans-Atlantic flight.
Then we turned back to the original course, retracing the twelve
mile detour made to circle the steamer. In a way we were pooling all
our chances and placing everything in a final wager on our original
judgment.
Quaintly, it was this moment of lowest ebb that Slim chose to
breakfast. Nonchalantly he hauled forth a sandwich.
We could see only a few miles of water, which melted into the
greyness on all sides. The ceiling was so low we could fly at an
altitude of only 500 feet. As we moved, our miniature world of
visibility, bounded by its walls of mist, moved with us. Half an hour
later into it suddenly swam a fishing vessel. In a matter of minutes a
fleet of small craft, probably fishing vessels, were almost below us.
Happily their course paralleled ours. Although the gasoline in the
tanks was vanishing fast, we began to feel land—some land—must
be near. It might not be Ireland, but any land would do just then.
Bill, of course, was at the controls. Slim, gnawing a sandwich, sat
beside him, when out of the mists there grew a blue shadow, in
appearance no more solid than hundreds of other nebulous
“landscapes” we had sighted before. For a while Slim studied it, then
turned and called Bill’s attention to it.
It was land!
I think Slim yelled. I know the sandwich went flying out the
window. Bill permitted himself a smile.
Soon several islands came into view, and then a coast line. From
it we could not determine our position, the visibility was so poor. For
some time we cruised along the edge of what we thought was typical
English countryside.
With the gas remaining, we worked along as far as safety
allowed. Bill decided to land. After circling a factory town he picked
out the likeliest looking stretch and brought the Friendship down in it.
The only thing to tie to was a buoy some distance away and to it we
taxied.
CHAPTER IX
JOURNEY’S END
THERE at Burry Port, Wales—we learned its name later—on the

morning of June 18, we opened the door of the fuselage and looked
out upon what we could see of the British Isles through the rain. For
Bill and Slim and me it was an introduction to the Old World.
Curiously, the first crossing of the Atlantic for all of us was in the
Friendship. None that may follow can have the quality of this initial
voyage. Although we all hope to be able to cross by plane again, we
have visions of doing so in a trans-Atlantic plane liner.
Slim dropped down upon the starboard pontoon and made fast to
the buoy with the length of rope we had on board for just such a
purpose—or, had affairs gone less well, for use with a sea anchor.
We didn’t doubt that tying to the buoy in such a way was against
official etiquette and that shortly we should be reprimanded by some
marine traffic cop. But the buoy was the only mooring available and
as we’d come rather a long way, we risked offending.
We could see factories in the distance and hear the hum of
activity. Houses dotted the green hillside. We were some distance off
shore but the beach looked muddy and barren. The only people in
sight were three men working on a railroad track at the base of the
hill. To them we waved, and Slim yelled lustily for service.
Finally they noticed us, straightened up and even went so far as
to walk down to the shore and look us over. Then their animation
died out and they went back to their work. The Friendship simply
wasn’t interesting. An itinerant trans-Atlantic plane meant nothing.
In the meantime three or four more people had gathered to look at
us. To Slim’s call for a boat we had no answer. I waved a towel
desperately out the front windows and one friendly soul pulled off his
coat and waved back.
It must have been nearly an hour before the first boats came out.
Our first visitor was Norman Fisher who arrived in a dory. Bill went
ashore with him and telephoned our friends at Southampton while
Slim and I remained on the Friendship. A vigorous ferry service was
soon instituted and many small boats began to swarm about us.
While we waited Slim contrived a nap. I recall I seriously considered
the problem of a sandwich and decided food was not interesting just
then.
Late in the afternoon Captain Railey, whom I had last seen in
Boston, arrived by seaplane with Captain Bailey of the Imperial
Airways and Allen Raymond of the New York Times.
Owing to the racing tide, it was decided not to try to take off but to
leave the plane at Burry Port and stay at a nearby hotel for the night.
Bill made a skilful mooring in a protected harbor and we were rowed
ashore. There were six policemen to handle the crowd. That they got
us through was remarkable. In the enthusiasm of their greeting those
hospitable Welsh people nearly tore our clothes off.
Finally we reached the shelter of the Frickers Metal Company
office where we remained until police reinforcements arrived. In the
meantime we had tea and I knew I was in Britain.
Twice, before the crowd would let us get away, we had to go to an
upper balcony and wave. They just wanted to see us. I tried to make
them realize that all the credit belonged to the boys, who did the
work. But from the beginning it was evident the accident of sex—the
fact that I happened to be the first woman to have made the Atlantic
flight—made me the chief performer in our particular sideshow.
With the descent of reporters one of the first questions I was
asked was whether I knew Colonel Lindbergh and whether I thought
I looked like him. Gleefully they informed me I had been dubbed
“Lady Lindy.” I explained that I had never had the honor of meeting
Colonel Lindbergh, that I was sure I looked like no one (and, just
then, nothing) in the world, and that I would grasp the first
opportunity to apologize to him for innocently inflicting the idiotic
comparison. (The idiotic part is all mine, of course.)
The celebration began with interviews and photographs. We
managed to have dinner and what was most comforting of all, hot
baths. The latter were high-lights of our reception, being the first
experience of the kind since leaving Boston weeks—or was it
months?—previously.
Sleep that night was welcome. In all, we had five or six hours. We
could not rest the next day, because an early start was necessary in
order to reach Southampton on schedule.
© Topical Press Agency

WE DIDN’T DOUBT THAT TYING TO THE BUOY WAS AGAINST
OFFICIAL ETIQUETTE
© International Newsreel
WE OPENED THE DOOR OF THE FUSELAGE AND LOOKED OUT
UPON WHAT WE COULD SEE OF THE BRITISH ISLES
Rain and mist in the morning, that finally cleared somewhat,

allowed us to take off. We skimmed over Bristol Channel and the
green hills of Devonshire, which were as beautiful as we had
imagined. In the plane with the crew were Captain Railey and Mr.
Raymond of the Times.
When we set out from Burry Port on this last lap of the journey,
Captain Bailey of the Imperial Airways had expected to guide us.
Unfortunately at the last moment he was unable to start his engine
and Bill decided to hop for Southampton unescorted.
As we approached, a seaplane came out to meet us, and we
presumed it was to guide us to the landing place. As Bill prepared to
follow, Captain Railey discovered that we were not being guided. In
the uncertainty of landing amid berthed steamers in a strange place,
Bill finally picked up the green lights of a signal gun which marked
the official launch coming to greet us. Mrs. Guest, owner of the
Friendship, and sponsor of the flight, was there, her son Raymond,
and Hubert Scott Payne of the Imperial Airways. My first meeting
with the generous woman who permitted me so much, was there in
Southampton. It was a rather exciting moment despite the fatigue
which was creeping upon all of us. On shore we were welcomed by
Mrs. Foster Welch, the Mayor of Southampton. She wore her official
necklace in honor of the occasion and we were impressed with her
graciousness. Though a woman may hold such office in Great
Britain, the fact isn’t acknowledged, for she is still addressed as if
she were a man.
With the crowd behind, I drove to London with Mr. and Mrs. Scott
Payne. The whole ride seemed a dream. I remember stopping to see
Winchester Cathedral and hearing that Southampton was the only
seaplane base in England and being made to feel really at home by
Mrs. Payne, who sat next to me.
London gave us so much to do and see that I hardly had time to
think. One impression lingers,—that of warm hospitality which was
given without stint. I stayed with Mrs. Guest at Park Lane. Lady Astor
permitted me a glance of beautiful country when she invited me to
Cliveden. Lord Lonsdale was host at the Olympic Horse Show, which
happened to be in action during our stay. The British Air League
were hosts at a large luncheon primarily organized by the women’s
division at which I was particularly glad to meet Madame de Landa
and Lady Heath. From the latter I bought the historic little Avro with
which she had flown alone from Cape Town to London. I was guest,
too, at a luncheon of Mrs. Houghton’s, wife of the American
Ambassador—and many other people lavished undeserved
hospitality upon us.
Being a social worker I had of course to see Toynbee Hall, dean
of settlement houses, on which our own Denison House in Boston is
patterned. Nothing in England will interest me more than to revisit
Toynbee Hall and the settlement houses that I did not see.
But this can be no catalogue of what that brief time in London
meant to us. To attempt to say “thank you” adequately would take a
book in itself—and this little volume is to concern the flight and
whatever I may be able to add about aviation in general. Altogether it
was an alluring introduction to England, enough to make me wish to
return and explore, what this time, I merely touched.
Before we left, the American correspondents invited me to a
luncheon—another of the pleasant memories of our visit. It was “not
for publication.” And although I was the only woman present we
talked things over, I think, on a real man-to-man basis. From first to
last my contact with the press has been thoroughly enjoyable; in
England and in America I could not possibly ask for greater
cooperation, sincerity, and genuine friendliness.
On June 28 we began our first ocean voyage, embarking on the
S.S. President Roosevelt of the United States Lines, commanded by
Captain Harry Manning. It really was our first ocean voyage and it
was then that we came to realize how much water we had passed
over in the Friendship. Eastbound the mileage had been measured
over clouds, not water. There never had been adequate
comprehension of the Atlantic below us.
A curious connection exists between the Roosevelt and the
America. Not only had the Roosevelt relayed some of our radio
messages, but Captain Fried of the America had formerly been
skipper of the Roosevelt. It was Captain Fried who figured so finely
in the heroic rescue of the sinking freighter Antinöe a couple of years
ago. Captain Fried, I was told, is interested in trans-Atlantic flight
projects. On the America he makes it a practice, when he knows a
flight is in progress, to have painted periodically the ship’s position
on the hatches in such a way that the information may be read by a
plane passing overhead. On the day when we saw the America he
had received no news of our flight so that preparations had not been
made for the usual hatch-painting. Actually, however, if we had
remained above the America perhaps a few more minutes the
information we sought would have been painted on her decks,
ending our uncertainties at once. As it was, Capt. Fried cabled us on
board the Roosevelt that the operator had called “plane, plane”—not
knowing our letters, in an effort to give us our bearings. But Bill could
not pick up the word.
When the Roosevelt reached quarantine in New York, she was
held there several hours until the Mayor’s yacht Macon arrived with
its officials, its bands, and our friends. I was sorry to delay other
passengers in the Roosevelt who had breakfasted at six and who
were forced to wait while we were welcomed.
Then up the bay, to the City Hall and to the Biltmore. Interviews,
photographs, and medals, and best of all, friends.
We were home again, with one adventure behind and, as always
in this life, others ahead.
CHAPTER X
AVIATION INVITES
THE reception given us—and accorded the flyers who preceded us

—indicates, it seems to me, the increasing air-mindedness of
America. And it is not only air-expeditions, pioneer explorations and
“stunts” which command attention.
The air mail, perhaps more than any other branch of aeronautics,
has brought home to the average man realization of the possibilities
of aviation. Its regularity and dependability are taken for granted by
many. While our development of this phase of air transport is
notable, the United States is somewhat backward in other branches,
compared with the European nations. We lag behind the procession
in passenger carrying and the number of privately owned planes, in
proportion to our size.
© Wide World Photos
LANDING AT BURRY PORT—THE UBIQUITOUS AUTOGRAPH
SEEKER
© International Newsreel
THE FIRST STEP IN ENGLAND. HUBERT SCOTT PAYNE HELPS ME
ASHORE
Abroad, the entire industry is generously subsidized by the

various governments. Of course, aviation here knows no such
support, a fact which means that, so far as we have gone, our
industry is on a sound basis economically.
Although air transport in the U. S. A. has had to pay its own way,
and is behind somewhat, slightly over 2000 commercial airplanes
were constructed in 1927, and operations in the field of mail and
transport flying approximated 6,000,000 miles flown. Nearly nine
thousand passengers were carried, and two and a half million
pounds of freight transported.
Impressive as are these figures, they are not comparable to the
volume inevitable.
When I am asked what individuals can do to aid aviation my reply
is, to those who haven’t flown: “Fly.” For, whether or not aviation will
be found useful in their lives, or whether they find flying pleasant, at
least they will have some understanding of what it is, if they go up.
Every day all of us have opportunity to do our bit—and to get our bit
—by using the air for our long-distance mail, and at least some of
our express and freight. And perhaps some who come to touch
aviation in these ways, will find an interest which will carry them into
the ranks of plane owners.
Most people have quite incorrect ideas about the sensation of
flying. Their mental picture of how it feels to go up in a plane is
based on the way the plane looks when it takes off and flies, or upon
their amusement-park experience in a roller-coaster. Some of the
uninitiated compare flying to the memory of the last time they peered
over the edge of a high building. The sensation of such moments is
almost entirely lacking in a plane. Flying is so matter-of-fact that
probably the passenger taking off for the first time will not know
when he has left the ground.
I heard a man say as he left a plane after his first trip, “Well, the
most remarkable thing about flying is that it isn’t remarkable.”
The sensation which accompanies height, for instance, so much
feared by the prospective air passenger, is seldom present. There is
no tangible connection between the plane and the earth, as there is
in the case of a high building. To look at the street from a height of
twenty stories gives some an impulse to jump. In the air, the
passenger hasn’t that feeling of absolute height, and he can look
with perfect equanimity at the earth below. An explanation is that
with the high building there is an actual contact between the body of
the observer and the ground, creating a feeling of height. The plane
passenger has no longer any vertical solid connecting him with the
ground—and the atmosphere which fills the space between the
bottom of the plane and the earth doesn’t have the same effect.
Many people seem to think that going up in the air will have some
ill effect on their hearts. I know a woman who was determined to die
of heart failure if she made a flight. She isn’t logical, for she rolls
lazily through life encased in 100 lbs. of extra avoirdupois, which
surely adds a greater strain on her heart—besides not giving it any
fun, at all.
Seriously, of course a person with a chronically weak heart, who
is affected by altitude, should not invite trouble by flying. A lame man
should exercise special care in crossing a street with crowded traffic,
and one with weak lungs should not attempt swimming a long
distance unaccompanied.
Consciousness of speed in the air is surprisingly absent. Thirty
miles an hour in an automobile, or fifty in a railroad train, gives one
greater sensation of speed than moving one hundred miles an hour
in a large plane. On the highway every pebble passed is a
speedometer for one’s eye, while the ties and track whirling
backward from an observation car register the train’s motion.
In the air there are no stones or trees or telegraph poles—no
milestones for the eye, to act as speed indicators. Only a somewhat
flattened countryside below, placidly slipping away or spreading out.
Even when the plane’s velocity is greatly altered no noticeable
change in the whole situation ensues—80 miles an hour at several
thousand feet is substantially the same as 140, so far as the
sensations of sight and feeling are concerned.
Piloting differs from driving a car in that there is an added
necessity for lateral control. An automobile runs up and down hill,
and turns left or right. A plane climbs or dives, turns, and in addition,
tips from one side to another. There is no worry in a car about
whether the two left wheels are on the road or not; but a pilot must
normally keep his wings level. Of course doing so becomes as
automatic as driving straight, but is, nevertheless, dependent upon
senses ever alert.
One of the first things a student learns in flying, is that he turns by
pushing a rudder bar the way he wants to go. (The little wagons of
our youth turned opposite the push, remember?)
When he turns he must bank or tip the wings at the same time.
Why? Because the plane would skid in exactly the same way a car
does if it whirls around a level corner.
The inside of an automobile race track is like a bowl, with the
sides growing steeper toward the top. The cars climb toward the
outer edge in proportion to their speed, and it is quite impossible to
force a slow car up the steep side of the bowl. The faster it goes the
steeper the bank must be and the sharper the turn. A pilot must
make his own “bowl” and learn to tip his plane the right degree
relative to the sharpness of his turn and his speed. A skid means
lack of control, for a while, either on the ground or in the air, and of
course is to be avoided. By the way, compensating for skidding is the
same with a car or plane—one turns either craft in the direction of
the skid.
Besides skidding, a plane can stall exactly as a car does on a hill.
The motor is overtaxed and stops. The plane motor doesn’t stop, but
just as a stalled car starts to roll backwards down the hill, so the
stalled plane begins to drop. Recovery of control with an automobile
is simple; only a matter of jamming on the brakes and getting the
engine started again. With the plane there is similarly little difficulty; it
falls for a moment until it attains enough forward speed to make the
rudder and elevators again effective. This is comparable to the
ineffectiveness of a rudder on a too slow-moving boat. If a plane stall
with out motor occurs so close to the earth that there isn’t time to
recover control, a hard landing results.
But in the air, as with automobiles, most accidents are due to the
human equation. The careful driver, either below or aloft, barring the
hard luck of mechanical failure, has remarkably little trouble,
considering what he has to contend with.
I think it is a fair statement that for the average landing, the
descent of the plane is less noticeable than the dropping of the
modern high-speed elevator. It comes down in a gentle glide at an
angle often much less than that of a country hill. As a result, unless a
passenger is actually watching for the landing, he is aware he is
approaching the ground only when the motors are idled.
“I would gladly fly if we could stay very close to the ground,” is a
statement that I have heard often in one way or another. As a matter
of fact, a plane 100 feet off the earth is in infinitely more danger than
one 3600 feet aloft.
© Topical Press Agency

IN LONDON (MISS EARHART)
© Paramount News Photos
“A BIG SMILE, PLEASE!”
Trouble in the air is very rare. It is hitting the ground that causes it.
Obviously the higher one happens to be, the more time there is to
select a safe landing place in case of difficulty. For a ship doesn’t fall
like a plummet, even if the engine goes dead. It assumes a natural
gliding angle which sometimes is as great as eight to one. That is, a
plane 5000 feet in the air can travel in any direction eight times its
altitude (40,000 feet) or practically eight miles. Thus it has a potential
landing radius of 16 miles.
Sometimes, a cautious pilot elects to come down at once to make
a minor engine adjustment. Something is wrong and he, properly, is
unwilling to risk flying further, even though probably able to do so.
Just so the automobile driver, instead of limping on with, say, worn
distributor points, or a foul spark plug, would do well to stop at once
at a garage and get his engine back into efficient working order.
All of which obviously points the necessity of providing frequent
landing places along all airways. Few things, I think, would do more
to eliminate accidents in the air. With perfected motors the dread of
forced landings will be forgotten, and with more fields, at least in the
populous areas, “repair” landings would be safe and easy.
Eliminating many of the expected sensations of flying doesn’t
mean that none are to be anticipated or that those left are only
pleasant. There are poor days for flying as well as good ones. Just
as in yachting, weather plays an important part, and sometimes
entirely prevents a trip. Even ocean liners are occasionally held over
in port to avoid a storm, or are prevented from making a scheduled
landing because of adverse conditions. In due time a plane will
probably become as reliable as these ocean vessels of today,
because although a severe storm will wreck it, its greater speed will
permit it to fly around the storm area—to escape dangers rather than
battle through them as a ship must do.
The choppy days at sea have a counterpart in what fliers call
“bumpy” conditions over land. Air is liquid flow and where
obstructions occur there will be eddies. For instance, imagine wind
blowing directly toward a clump of trees, or coming in sudden
contact with a cliff or steep mountain. Water is thrown up when it
strikes against a rock and just so is a stream of air broken on the
object in its way, and diverted upward in atmospheric gusts which
correspond to the spray of the seaside. Encountering such a
condition a plane gets a “wallop”—is tossed up and buffeted as it
rolls over the wave.
There are bumps, too, from sources other than these land shoals.
Areas of cool air and warm disturb the flow of aerial rivers through
which the plane moves. The “highs” and “lows” familiar to the
meteorologists—the areas of high and low barometric pressure—are
forever playing tag with each other, the air from one area flowing in
upon the other much as water seeks its own level, creating fair
weather and foul, and offering interesting problems to the students of
avigation, not to mention variegated experiences to the flyer himself.

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2. The prisoner's dilemma is a game of strategy:

3. To economists, games are:

4. To economists, a game is:

7. Game theory is:

8. Game theory is:

10. Behaving strategically:

11. Behaving strategically means:

13. All games involve which of the following?

14. All games involve which of the following?

15. All games involve which of the following?

16. All games involve which of the following?

17. In games, rules:

18. In real life, people's behavior is constrained by:

20. In games, strategies are:

21. In games, the strategy to reach a particular goal:

23. Payoffs are:

24. An example of a payoff in a game would be:

25. In game theory, an example of a payoff could be:

26. The prisoner's dilemma game can involve:

28. The prisoner's dilemma can be summarized in:

29. A decision matrix:

31. A dominant strategy is one:

32. A dominant strategy:

33. In the prisoner's dilemma game:

34. In the prisoner's dilemma:

35. In the prisoner's dilemma game:

36. In the prisoner's dilemma game:

37. In the prisoner's dilemma game:

38. The prisoner's dilemma game can be used to describe

39. The prisoner's dilemma game:

40. In the prisoner's dilemma game:

41. The players of prisoner's dilemma-type games:

The figure shown portrays a game using a:

The game in the figure shown is a version of:

A. the prisoner's dilemma.

The game in the figure shown is a version of:

A. charge a high price.

A. charge a high price.

According to the figure shown, Nike:

A. has a dominant strategy to charge a high price.

According to the figure shown, Adidas:

A. should charge a low price, regardless of what Nike chooses to do.

According to the figure shown:

A. there is no stable equilibrium to the game.

A. Nike charges a high price, and Adidas charges a low price.

A. Nike has a dominant strategy, but Adidas does not.

A. both Joe and Sarah put forth low effort.

A. the prisoner's dilemma.

The game in the figure shown is a version of: