Game Theory, Spring Semester 2024

Plaksha University, Mohali

Sample Set Questions, Time: 1:30 minutes. Total Points: 45

Important Instructions: More than one option can be correct. If you select any wrong option, you will be
awarded 0. For each question, you will be awarded points proportional to the number of correct options
you select. No extra time will be awarded.
Instructions: There are 17 questions in this exam. Abbreviations: NOTA- None of the above. AOTA- All of
the above, BNE- Bayes-Nash Equilibrium, GT- Grimm Trigger, TFT- Tit-for-Tat, δ- Discount Factor, DSIC-
Dominant Strategy Incentive Compatibility, DSE- Dominant Strategy equilibrium, BIC- Bayesian Incentive
Compatible, BNE- Bayesian Nash equilibrium, GST- Gibbard-Sattherwaite Theorem, VCG- Vickrey-Clarke-
Groves, AE- Allocatively Efficient.

Name: , ID:

Q1.[2 points] Which of the following applies to an infinitely repeated game?

a. Each player has perfect information about the other players’ strategies.

b. Players observe the others’ actions in the previous rounds.

c. The players can act in response to the actions in the previous rounds.
d. The players can influence the behaviour of others by their actions.

Q2.[2 points] WOTF applies to the idea of Sequential Equilibrium?

a. Sequential equilibrium always predicts a reasonable outcome.

b. Sequential equilibrium always predicts an unreasonable outcome.

c. Sequential equilibrium can predict an unreasonable outcome.
d. Sequential equilibrium can predict a reasonable outcome.

Q3.[2 points] Which of the following applies to the discount factor δ in an infinitely repeated game?

a. The discount factor δ impacts players’ strategies or outcomes.

b. A lower discount factor δ would incentivize the players to focus on the short term.

c. A higher discount factor δ can lead to outcomes that are not the dominant in the non-repeated
version.
d. NOTA.

Q4.[2 points] Consider the two-player simultaneous move game,

P 1\P 2 Lef t Centre Right

T op (4, 2) (3, 3) (1, 2)
M iddle (3, 3) (5, 5) (2, 6)
Bottom (2, 1) (6, 2) (3, 3)

Suppose that the game is repeated for M (Finite number) periods. Which of the following is the outcome
of a SGPE?

a. (Middle, Centre) is played in M periods.

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 b. (Bottom, Right) is played in M periods.
c. If M = 2, then (Bottom, Right) is played in the first turn, and (Middle, Centre) in the next turn.
d. NOTA.

Q5.[5 points] Suppose in a boxing game.

• There are two boxers.

• They can either “fight” or “Not fight”.
• Boxer 1 is either “weak” or “strong” with probability p and (1 − p), respectively. Boxer 2 is always
“weak”.
• If any Boxer wins, then he will get a prize money of X dollar. In the case of a draw no prize money
will be awarded.
• A boxer has a “cost” of fighting, which is equal to s > 0 if it is strong and w > 0 if it is weak (where
s < w < X)
• There is no cost of fighting if the opponent doesn’t fight.
• The payoff matrix is given below.

P 1\P 2 F ight N otf ight P 1\P 2 F ight N otf ight

F ight (−w, −w) (X, 0) F ight (X − s, −w) (X, 0)
N otf ight (0, X) (0, 0) N otf ight (0, X) (0, 0)

Table 1: Weak Table 2: Strong

Find all the Bayes Nash equilibrium.

Q6.[7 points] Consider the following two-player sequential game with Nature (N),

Find all the sequential equilibria.

Q7.[2 points] Which of the following applies to a simultaneous-move game with uncertainty?

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 a. Players have complete information about the other players’ types.
b. A player’s strategy is determined by their beliefs about the other players’ types and actions.
c. A player’s strategy is only determined by their beliefs about the other players’ types.
d. NOTA

Q8. [2 points] Suppose the Prisoner’s dilemma is played infinitely repeatedly. Then which of the following
are true?

a. (GT, GT ) is a NE for all values of δ.

b. (T F T, T F T ) is not a NE for any value of δ.
c. (GT, GT ) is a NE for certain values of δ.
d. (T F T, T F T ) is a NE for certain values of δ.

Q9. [2 points] Which of the following is/are true?

a. In a finitely repeated Prisoner’s Dilemma, there is only one SGPE.

b. In an infinitely repeated Prisonners’ Dilemma, there are multiple NE (for certain values of δ).
c. In an infinitely repeated Prisonners’ Dilemma, there are multiple SGPE (for certain values of δ).
d. NOTA.

Q10. [2 points] The following applies to an auction in the seller-two-buyer example where the buyers are
asked to submit a bid (bid as defined in your class slides):

a. The bid is a value of how much the buyers are willing to pay.
b. The bid is not a direct signal about the valuation of a player
c. The auction with a bid is an indirect mechanism
d. The auction with a bid is a direct mechanism

Q11. [2 points] According to Groves and Green-Laffont Theorems (supposing their conditions apply), which
of the following are true?
P
a. An AE outcome f (·) where ti (θi , θ−i ) = j̸=i vj (k(θ), θj ) + h(θ−i ) is DSIC
P
b. An AE outcome f (·) where ti (θi , θ−i ) = j̸=i vj (k(θ), θj ) + hi (θ−i ) is DSIC
P
c. An AE outcome f (·) where ti (θi , θ−i ) = j̸=i vj (k(θ), θj ) + h(θ) is DSIC
P
d. An AE outcome f (·) where ti (θi , θ−i ) = j̸=i vj (k(θ), θj ) + hi (θ) is DSIC

Q12. [2 points] Let θi denote the type of a buyer i in the two buyers and a seller example. Suppose that
the seller herself is the mechanism designer and her sole objective is to sell to the highest valuation. If
f (·) denotes the desired outcome and h(α, β, θi ) = αθi + β, α ∈ [0, 1], β ∈ [0, 1], then which of the following
are direct mechanisms for f (·).

a. Ask reports (θ̂i s) of θi s and apply f (θ̂), θ̂ = {θ̂1 , θ̂2 }.

b. Ask reports (ĥi s) of h(1, 0, θi )s and apply f (ĥ), ĥ = {ĥ1 , ĥ2 }.

c. Ask reports (ĥi s) of h(α, β, θi )s, where α and β are to be chosen independently by each buyer, and
apply f (ĥ), ĥ = {ĥ1 , ĥ2 }.

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 d. NOTA

Q13.[2 points] WOTF applies to a sequential-game with uncertainty?

a. The players may not have complete information about the others’ types.
b. The players can be uncertain about the other players’ moves.

c. The players’ actions are determined by their beliefs about the other players’ types and strategies.
d. NOTA

Q14.[2 points] Which of the following applies to the tit-for-tat strategy?

a. It involves cooperating throughout

b. It involves cooperating initially and defecting thereafter if the other defects.

c. It involves mirroring the opponent’s previous move in each round.

d. It involves randomly selecting moves without considering the others’ actions.

Q15. [5 points] Let’s consider the game,

P 1\P 2 M ax M in
High (2, 2) (−2, 6)
Low (6, −2) (0, 0)

Suppose the above game is played infinitely many times. The total payoff is the discounted (with discount
factor δ) sum of the payoff obtained in each round. Find the values of the discount factor δ for which
(GT, GT ) is a NE.

Q16. [2 points] Consider a first price auction in the two-buyer example, where the seller is the mechanism
designer and the buyers (players) are asked to submit a bid (bid as defined in your class slides), the good
is assigned to the highest bid, and payment is made at the highest bid. Then which of the following are
true.

a. First price auction is an indirect mechanism

b. First price auction is a direct mechanism

c. If buyers report their true valuation, then the allocation and transfer would be efficient.
d. If buyers report their true valuation, then the allocation and transfer would only be allocatively
efficient.

Q17. [2 points] Which of the following are true,

a. In a VCG environment, AE outcomes can be DSIC.

b. In a VCG environment, AE can be DSIC and individually rational.

c. Under the conditions of GST, only a dictatorial f (·) is DSIC.

d. The GST does not apply to the VCG environment