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Exam 21: Game Theory

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Question 21

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The maximin approach to decision making refers to

A) minimizing the maximum return.
B) maximizing the minimum return.
C) maximizing the maximum return.
D) minimizing the minimum return.

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

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Question 22

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

A) True
B) False

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Question 23

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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?

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.

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

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

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.

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

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

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

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

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

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

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

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

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

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

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

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

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.