Game Theory in Business

What is the optimal outcome for both players in the prisoner's dilemma?

• Both confess

• Both remain silent

• Both deny the crime

• One confesses, one remains silent

Which field is NOT mentioned as an application area for game theory?

• Astrology

• Biology

• Psychology

• Economics

What is the main goal of game theory?

• To predict weather patterns

• To identify optimal strategies for players

• To simplify mathematical equations

• To create new games

Who is known for the concept of Nash equilibrium?

• John Von Neumann

• Lloyd Shapley

• Oscar Morgenstern

• John Nash

Which of the following is NOT a business application of game theory?

• Weather forecasting

• Strategic alliances

• Advertising

• Pricing strategies

What is the first step in analyzing a scenario using game theory?

• Analyze the strategies

• Consider the limitations

• Model the game

• Define the players

Which strategy involves cooperating initially and then matching the opponent's move?

• Nash equilibrium

• Dominant strategy

• Tit for Tat

• Grim trigger

What does game theory assume about decision makers?

• They are always irrational

• They act in their own best interests

• They have no interests

• They always cooperate

Which strategy involves switching to defection if the other player defects?

• Tit for Tat

• Grim trigger

• Nash equilibrium

• Dominant strategy

Which of the following is a limitation of game theory?

• It always predicts real-world outcomes

• It simplifies complex scenarios

• It is easy to apply

• It assumes irrational decision making