Lecture 2

Question 1

What is a strategy?

Answer 1

complete contingent plan, or decision rule, specifies how player will act in every possible circumstance

Question 2

What is a strictly dominate strategy?

Answer 2

Strategy S strictly dominates Strategy SI if the payoff to S is strictly greater than SI’s regardless of which strategy is chosen by the other player(s)

Question 3

If a player has a strictly dominant strategy, will they play that strategy?

Answer 3

Yes

Question 4

If a player has a strictly dominated strategy, will they ever play that strategy?

Answer 4

No

Question 5

What is a weakly dominant strategy?

Answer 5

Strategy S weakly Dominates Strategy D if it does at least as well against every strategy of other players, and against some it does strictly better

Question 6

Unlike a strictly dominated strategy, a strategy that is only weakly dominated can or cannot be ruled out based solely on principles of rationality?

Answer 6

cannot

Question 7

What is a second price, or Vickrey Auction?

Answer 7

Bidding war where highest priced winner wins but pays second highest bid

Question 8

In a Vickrey Auction, submitting a bid of Vi (valuation) is which kind of strategy?

Answer 8

Weakly dominant