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Exam 21: Game Theory

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Question 21

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A tabular presentation that shows the outcome for each decision alternative under the various possible states of nature is called a

A) decision tree.
B) payoff table.
C) feasible region.
D) payback matrix.

E) A) and B)
F) A) and C)

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Question 22

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In a strategy it is assumed that the payoff table is known to all players.

A) True
B) False

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Question 23

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Determining the worst payoff for each alternative and choosing the alternative with the best of the worst payoffs is called a ________ criterion.

In the expected ________ method, a plan of strategies is determined by each player so that expected gain of one equals the expected loss of the other.

The ________ for a mixed strategy game assumes that the game is played many times.

With the minimax criterion, each player seeks to minimize maximum possible losses.

The payoffs for a mixed strategy game assumes that the game is played many times.

$\begin{array} { | l | c | r | r | } \hline & \text { s1 } & \text { s2 } & \text { s3 } \\\hline \mathrm { d } _ { 1 } & 10 & 8 & 6 \\\hline \mathrm { d } _ { 2 } & 14 & 15 & 2 \\\hline \mathrm { d } _ { 3 } & 7 & 8 & 9 \\\hline\end{array}$ What decision should be made by the optimistic decision maker?

$\begin{array} { | c | c | c | c | } \hline & \text { s1 } & \text { s2 } & \text { s3 } \\\hline \mathrm { d } _ { 1 } & 10 & 8 & 6 \\\hline \mathrm { d } _ { 2 } & 14 & 15 & 2 \\\hline \mathrm { d } _ { 3 } & 7 & 8 & 9 \\\hline\end{array}$ What decision should be made by the conservative decision maker?

In a pure strategy game the optimal strategy for each player results in the same payoff, called an ________ point.

In a zero-sum game, one player's gains represent another's exact losses.

A ________ is a plan of action followed by a player.

The maximin approach to decision making refers to

In a ________ game each player adopts a single strategy as an optimal strategy.

Given the following payoff table: $\begin{array} { l l l } & \text { A } & \text { B } \\1 & 20 & 10 \\2 & 4 & 15\end{array}$ What is the value of the game?

A point of equilibrium is a value that is simultaneously the maximum of a row and the minimum of a column.

In a pure strategy game, each player adopts a single strategy as an optimal strategy.

Two companies are about to make a decision regarding an investment in a new promotional campaign. Company A will either advertise in all media or advertise in newspapers only. Company B will either run a sweepstake or run a big sale. The payoff matrix is shown below. $\begin{array} { l l c c } \hline && { \text { Company B } } \\& &\mathrm { B } _ { 1 } : \text { Run a } & \mathrm { B } _ { 2 } : \text { Run a } \\& &\text { sweepstakes } & \text { big sale } \\\hline & \begin{array} { l } \text { A1: Advertise } \\\text { in all media }\end{array} & 4 &-1 \\\text { Company A } & \begin{array} { l } \text { A2: Advertise } \\\text { in newspapers only }\end{array} & - 2 & 1 \\\hline\end{array}$ Determine the proportion of time that Company B should employ each strategy.

A point of equilibrium is a value that is simultaneously the minimum of a row and the maximum of a column.

Two companies are about to make a decision regarding an investment in a new promotional campaign. Company A will either advertise in all media or advertise in newspapers only. Company B will either run a sweepstake or run a big sale. The payoff matrix is shown below. $\begin{array} { l l c c } \hline && { \text { Company B } } \\&& \mathrm { B } _ { 1 } : \text { Run a } & \mathrm { B } _ { 2 } : \text { Run a } \\&& \text { sweepstakes } & \text { big sale } \\\hline & \begin{array} { l } \text { A1: Advertise } \\\text { in all media }\end{array} & 4 &-1 \\\text { Company A } & \begin{array} { l } \text { A2: Advertise } \\\text { in newspapers only }\end{array} & - 2 & 1 \\\hline\end{array}$ Determine the proportion of time that each company should employ each strategy.