1. What is the Nash equilibrium or equilibria in Game 1 on the pdf
A) (D; d)
B) None
C) (U; u)
D) (D; u)
E) (U; d)

2. Which players have dominant strategies in Game 1 on the pdf and what are they?
A) Player 1 has a dominant strategy - D
B) Player 2 has a dominant strategy - d
C) Neither player has a dominant strategy
D) Player 1 has a dominant strategy (D) and Player 2 has a dominant strategy (d)
E) Player 1 has a dominant strategy (U) and Player 2 has a dominant strategy (u)

3. What is the Nash equilibrium or equilibria in Game 2 on the pdf?
A) (U; u)
B) None
C) (U; u) (D; d)
D) (D; u) (U; d) (D; d)
E) (D; d)

4. Which players have dominant strategies and what are they in Game 2 on the pdf?
A) Player 1 has a dominant strategy (U)
B) Player 2 has a dominant strategy (u)
C) Player 1 has a dominant strategy (U), Player 2 has a dominant strategy (u)
D) Neither player has a dominant strategy
E) Player 1 has a dominant strategy (U), Player 2 has a dominant strategy (d)

5. What is the Nash equilibrium or equilibria of Game 3 on the pdf?
A) (U; u) (D; d)
B) None
C) (U; u)
D) (D; u) (U; d)
E) (D; d)

6. Which players have a dominant strategy and what are they in Game 3 on the pdf?
A) Player 1 has a dominant strategy (U)
B) Player 2 has a dominant strategy (u)
C) Player 1 has a dominant strategy (U), Player 2 has a dominant strategy (u)
D) Neither player has a dominant strategy
E) Player 1 has a dominant strategy (U), Player 2 has a dominant strategy (d)

7. What is the Nash equilibrium or equilibria of Game 4 on the pdf?
A) (U; u) (U; d)
B) None
C) (U; u)
D) (D; u)
E) (U; d)

8. Which players have a dominant strategy and what are they in Game 4 on the pdf?
A) Player 1 has a dominant strategy (U)
B) Player 2 has a dominant strategy (u)
C) Player 1 has a dominant strategy (U), Player 2 has a dominant strategy (u)
D) Neither player has a dominant strategy
E) Player 1 has a dominant strategy (U), Player 2 has a dominant strategy (d)

9. In 2006, there were a number of media reports about the next generation of DVD players which produce picture and sound that is much clearer than that produced by current machines. However, there are two competing formats, Blu-ray (Sony) and HD DVD (Toshiba). Both are affiliated with certain movie studios, who have agreed to release their movies in one or the other of the new formats.

This creates a problem for the producers of this new technology - each wants their own version to win out, but by competing they make it entirely likely that most consumers will sit back and wait until there is (a) a clear winner or (b) a newer, even better, method of supplying movies is developed by someone else. If this happens, both Sony and Toshiba lose out.Imagine that both companies have developed a new product, but with different formats. If one of the companies would be willing to switch quickly (assume that copyright laws would allow them to produce something similar), that company would lose some time and market share, but be able to get into the market. Consumers would be more willing to buy the new technology, and both companies would make more money.

If neither company is willing to coordinate with the other, they end up in a war of attrition, with fewer customers. This is shown in Game 5 on the pdf. What payoff would Toshiba get if it chose to produce HD DVD, while Sony chose to produce Blu-Ray?
A) 1
B) 2
C) 3
D) 4

10. What payoff would Sony get if it chose to switch to HD DVD while Toshiba chose to produce HD DVD?
A) 1
B) 2
C) 3
D) 4

11. Which of the following preference orderings describes the way that Toshiba ranks the four possible outcomes? (Note: if X > Y, then X is preferred to Y.)
A) Both players produce HD DVD >Toshiba produces HD DVD, Sony produces Blu-Ray >Both players produce Blu-Ray >Toshiba produces Blu-Ray, Sony produces HD DVD
B) Both players produce HD DVD > Both players produce Blu-Ray > Toshiba produces HD DVD, Sony produces Blu-Ray > Toshiba produces Blu-Ray, Sony produces HD DVD
C) Both players produce Blu-Ray > Both players produce HD DVD > Toshiba produces HD DVD, Sony produces Blu-Ray > Toshiba produces Blu-Ray, Sony produces HD DVD.

12. What is (are) the Nash equilibrium (equilibria) in the game?
A) (Switch to Blu-Ray, Blu-Ray) and (HD DVD; Switch to HD DVD)
B) (Switch to Blue-Ray; Blue-Ray).
C) (HD DVD; Blue-Ray).
D) (HD DVD; Switch to HD DVD).

13. What is (are) the expected outcome (outcomes) of the game?
A) Since there was only one Nash equilibrium, I would expect both players to choose the strategies that constitute that equilibrium.
B) Since there was more than one Nash equilibrium, it is difficult to say what the actual outcome of the game will be

14. In the game, do the players (Sony and Toshiba) move simultaneously or sequentially?
A) simultaneously
B) sequentially

15. Free trade occurs when goods and services between countries flow unhindered by government-imposed restrictions such as tariffs, quotas, and anti-dumping laws that are often designed to protect domestic industries. Although it is well-known that free trade creates winners and losers, a broad consensus exists among most economists that free trade has a large and unambiguous net gain for society as a whole.

For example, Robert Whaples (2006) finds in a survey of economists that "87.5% agree that the U.S. should eliminate remaining tariffs and other barriers to trade" and that "90.1% disagree with the suggestion that the U.S. should restrict employers from outsourcing work to foreign countries." Despite this consensus, it is not at all clear that countries will actually adopt policies promoting free trade. Consider the following strategic situation in which the US and the EU are engaged in trade negotiations. Both countries must decide whether to reduce their tariffs or impose new tariffs.

The best outcome for both countries is for them to impose new tariffs and for the other side to reduce tariffs; they can export more easily to the other country and they obtain increased revenue from the new tariffs. The worst outcome for both countries is for them to reduce tariffs and for the other country to increase tariffs; they will lose jobs due to reduced exports and the other country will benefit from their lower tariffs. Of the remaining two outcomes, both countries prefer the outcome where they reduce tariffs to the one where they both impose new tariffs. If both countries reduce their tariffs, then each country can benefit from increased free trade.

If both countries impose new tariffs, there is a trade war in which each country sees a decline in trade and a loss of jobs. Based on this story, the preference-ordering for the EU over the four possible outcomes is:· Impose; Reduce > Reduce; Reduce > Impose; Impose > Reduce; Impose and the preference-ordering for the U.S. is: · Reduce; Impose > Reduce; Reduce > Impose; Impose > Impose; Reducewhere the EU's action is given first, the U.S.'s action is given second, and ">" means "is strictly preferred to". Using the ordinal preferences (4, 3, 2, 1) to capture these preference orderings, fill in the empty payoff matrix in Game 6 on the pdf. Based on the preference orderings in the Free Trade Game, what is this sort of game more generally called?

A) prisoner's dilemma
B) pure coordination game
C) chicken
D) asymmetric coordination game

16. Based on this story, the preference-ordering for the EU over the four possible outcomes is:· Impose; Reduce > Reduce; Reduce > Impose; Impose > Reduce; Impose and the preference-ordering for the U.S. is: · Reduce; Impose > Reduce; Reduce > Impose; Impose > Impose; Reducewhere the EU's action is given first, the U.S.'s action is given second, and ">" means "is strictly preferred to". Using the ordinal preferences (4, 3, 2, 1) to capture these preference orderings, fill in the empty payoff matrix.What is (are) the Nash equilibrium (equilibria) of the game?
A) (Reduce Tariffs; Reduce Tariffs)
B) (Reduce Tariffs; Impose Tariffs)
C) (Impose Tariffs; Reduce Tariffs)
D) (Impose Tariffs; Impose Tariffs)
E) There is no Nash equilibrium.

17. Does the EU have a dominant strategy in the Free Trade Game
A) yes, reduce tariffs
B) yes, impose new tariffs
C) no

18. Does the US have a dominant strategy in the Free Trade Game
A) yes, reduce tariffs
B) yes, impose new tariffs
C) no

19. What is (are) the expected outcome (outcomes) of the Free Trade game?
A) increased free trade
B) lost jobs in the EU, increased revenue in the US
C) increased revenue in EU, lost jobs in the US
D) trade war

20. Stag Hunt Game The story of the stag hunt is that two hunters are hunting a deer in the forest. It requires the cooperation of both hunters to capture the deer, which can feed the entire village. Instead of cooperating, though, the hunters can choose to defect to capture a rabbit, which will feed only their own family. Hunters prefer to cooperate and capture the deer, but do not want to be left waiting for their comrade if he or she runs off to get a rabbit. The preference ordering for player 1 is the following: CC>DC>DD>CD The preference ordering for player 2 is the following: CC>CD>DD>DC C=cooperate (deer), D=defect (rabbit). We list player 1's action first, then player 2's action i.e. CD means player 1 chooses C and player 2 chooses D. Examine the matrix below. Using the ordinal payoffs (4, 3, 2, 1), fill in the payoff matrix in Game 7 on the pdf. What is the Nash equilibrium or equilibria for the game?
A) (C; D)
B) (D; D)
C) (C; C)
D) (C; C) (D;D)
E) (C;C) (C;D)

21. Game of Chicken or the game from the film Footlose Story: I am one of two drivers racing down a deserted road, and you are the other. We are racing straight at each other. Our frieds are watching us to see who has more guts. I want you to swerve while I keep going. If you swerve, you are a chicken and I gain status among our peers. If both of us swerve, then its an OK outcome because neither of us gains or loses respect, and we both may gain some respect with everyone else just because we played. If I swerve and you don't, then I am chicken and lose status among our peers; I don't like this much. But if neither swerves, we are both dead and it doesn't matter - this is the worst possible outcome. The preference ordering for player 1 is the following: DC>CC>CD>DD The preference ordering for player 2 is the following: CD>CC>DC>DD C = cooperate (Swerve) and D = defect (drive straight). Look at the matrix below. Using the ordinal payoffs (4, 3, 2, 1), fill in the matrix in Game 8 on the pdf. What is the Nash equilibrium or equilibria for this game?
A) (C; C)
B) (D; D)
C) (C; D) (D; C)
D) (C; C) (D; D)
E) (C; C) (C; D) (D; C)

22. In an American football game, we can think that the offense has four possible strategies to progress down the field: run the ball, short throws, medium throws, and long throws. The defense has three strategies to try to stop this: counter the run, counter the pass, or blitz the quarterback. Let's say that after studying many games, statisticians have come up with the payoff matrix shown in Game 9 on the pdf, where the numbers in each cell indicate the expected number of yards either gained by the offense or lost by the defense. As you can see, every yard gained by the offense is a yard lost by the defense. As always, the players prefer higher numbers to lower numbers.What is (are) the Nash equilibrium (equilibria)?
A) (run; counter run)
B) (short pass; counter pass)
C) (run; blitz)
D) (medium pass; counter pass)

23. Does the offense have a dominant strategy in the American Football Game?
A) yes, run
B) yes, short pass
C) no
D) yes, medium pass
E) yes, long pass

24. The PACL measure of democracy classifies a country as a democracy if (i) the chief executive is elected, (ii) the legislature are elected, (iii) more than one party competes, and (iv) there has been an alternation in power. The Freedom House measure classifies a country's level of "freedom" based on many criteria, including whether the government is accountable, the level of corruption, if minorities are autonomous, if people are treated equally under the law, if they have equality of opportunity and so on. Say you had the following hypothesis:Governments are less corrupt in democracies than in non-democracies. If you want your hypothesis to be falsifiable, which measure of democracy should you use?
A) should use PACL
B) should use Freedom House
C) could use either measure and the hypothesis would be falsifiable
D) should not use either measure

25. Say you had the following hypothesis:Democracies are more likely than dictatorships to join international organizations. If you want your hypothesis to be falsifiable, which measure of democracy should you use?
A) should use PACL
B) should use Freedom House
C) could use either measure and the hypothesis would be falsifiable
D) should not use either measure

26. PACL classifies countries as democracies or dictatorships. Their measure of democracy is a(n):
A) ordinal measure
B) interval measure
C) nominal measure

27. Imagine that the true value of economic inequality in country X is 4, on a scale from 1-10. Say there are four people who code the level of economic inequality in country X using two different measures of inequality, A and B. Measure A yields values of 2, 3, 5, and 6. Measure B yields values 6, 6, 7, and 6. Is Measure A or Measure B a more reliable measure of democracy in country X?
A) A is more reliable
B) B is more reliable
C) they are both equally reliable

28. The economic growth rate in Bangladesh in 2000 was 3.7%. What kind of measure is this?
A) ordinal
B) interval
C) nominal

29. Imagine that the true value of democracy in country X is 5. Say there are four people who code the level of democracy in country X using two different measures of democracy, A and B. Measure A yields values of 3, 4, 6, and 7. Measure B yields values 6, 6, 7, and 6. Is Measure A or Measure B a more valid measure of democracy in country X?
A) A is more valid
B) B is more valid
C) they are both equally valid

30. A minimalist conceptualization of democracy classifies a country as being democratic if it
A) has a minimal set of civil rights
B) has certain institutions
C) produces certain outcomes