GAME THEORY: NON-COOPERATIVE GAMES

1.

Game Theory was first developed systematically by:
A) Adam Smith
B) John Nash
C) von Neumann and Morgenstern
D) Edgeworth
Answer: C
🟩 They developed Game Theory in their 1944 book “Theory of Games and Economic Behavior.”

2.

A game in which players act independently without binding agreements is called:
A) Cooperative Game
B) Non-Cooperative Game
C) Sequential Game
D) Constant-Sum Game
Answer: B

3.

In a non-cooperative game, each player:
A) Tries to maximize joint payoffs
B) Acts according to others’ commands
C) Maximizes own payoff given others’ strategies
D) Chooses randomly
Answer: C

4.

A strategy in game theory refers to:
A) The payoffs obtained in the game
B) A complete plan of action for a player
C) The utility of outcomes
D) The probability of success
Answer: B

5.

A dominant strategy is one that:
A) Maximizes payoff regardless of opponents’ choices
B) Minimizes losses in all cases
C) Depends on the probability of other outcomes
D) Requires cooperation
Answer: A

6.

A Nash Equilibrium occurs when:
A) All players achieve maximum payoffs
B) No player can improve payoff by unilaterally changing strategy
C) All players follow dominant strategies
D) Each player earns equal payoffs
Answer: B

7.

In a Nash Equilibrium, each player’s strategy is a best response to:
A) The dominant strategy
B) The random strategy
C) The other player’s strategy
D) The cooperative outcome
Answer: C

8.

Which of the following best describes a zero-sum game?
A) Both players can win simultaneously
B) One player’s gain equals another’s loss
C) Total payoffs always increase
D) All outcomes are uncertain
Answer: B

9.

In a non-zero-sum game, players’ interests are:
A) Perfectly opposed
B) Independent
C) Interdependent; both can gain or lose
D) Random
Answer: C

10.

The Prisoner’s Dilemma demonstrates that:
A) Cooperation always yields maximum gain
B) Rational self-interest can lead to sub-optimal outcomes
C) Players always act irrationally
D) Equilibrium is Pareto optimal
Answer: B

11.

In the Prisoner’s Dilemma, mutual defection is:
A) Dominant strategy equilibrium
B) Pareto optimal
C) Mixed strategy equilibrium
D) Cooperative solution
Answer: A

12.

A Nash Equilibrium that is not Pareto optimal implies:
A) Mutual cooperation
B) Inefficient outcome
C) Maximum collective welfare
D) Repeated game
Answer: B

13.

If each player has a dominant strategy, then the game has:
A) Multiple equilibria
B) No equilibrium
C) Dominant strategy equilibrium
D) Sequential equilibrium
Answer: C

14.

A player’s payoff depends on:
A) Only his own choice
B) Others’ choices as well
C) Random factors
D) Market conditions alone
Answer: B

15.

Which of the following is a feature of non-cooperative games?
A) Binding agreements between players
B) Rational decision-making in isolation
C) Centralized coordination
D) Mutual contracts
Answer: B

16.

The concept of Mixed Strategy Nash Equilibrium allows:
A) Fixed choices
B) Randomization of strategies with probabilities
C) Cooperation between players
D) Sequential decisions
Answer: B

17.

The expected payoff in a mixed strategy game is:
A) Always zero
B) The probability-weighted sum of possible payoffs
C) The minimum of payoffs
D) The dominant outcome
Answer: B

18.

Which of the following games always has at least one Nash Equilibrium (pure or mixed)?
A) Infinite games
B) Cooperative games
C) Any finite game
D) Zero-sum games only
Answer: C
🟩 Nash’s theorem states that every finite game has at least one equilibrium.

19.

In an oligopoly, Game Theory is applied to study:
A) Demand forecasting
B) Price and output interdependence
C) Production planning
D) Capital formation
Answer: B

20.

The Advertising Game between firms typically results in:
A) Cooperative outcome
B) Dominant strategy equilibrium
C) Zero-sum outcome
D) Pareto optimal equilibrium
Answer: B

21.

In a repeated game, cooperation may emerge due to:
A) Short-term profit motives
B) Absence of retaliation
C) Future punishment and reputation effects
D) Lack of communication
Answer: C

22.

The Stackelberg Model of oligopoly is an example of a:
A) Simultaneous game
B) Sequential game
C) Repeated game
D) Zero-sum game
Answer: B

23.

If one player’s optimal strategy changes with another’s, the game is:
A) Independent
B) Strategic
C) Cooperative
D) Static
Answer: B

24.

The Maximin strategy in non-cooperative games is suitable for:
A) Optimistic players
B) Pessimistic players
C) Indifferent players
D) Neutral players
Answer: B

25.

A game in which both players can gain by cooperating is called:
A) Zero-sum
B) Non-zero-sum
C) Negative-sum
D) Sequential
Answer: B

26.

The equilibrium in the Prisoner’s Dilemma is:
A) Pareto optimal
B) Sub-optimal but stable
C) Unstable and non-existent
D) Cooperative
Answer: B

27.

The Best Response Function of a player shows:
A) The strategies that maximize his payoff given others’ strategies
B) The probability of success
C) The market equilibrium
D) The Pareto frontier
Answer: A

28.

In a two-player zero-sum game, the sum of both players’ payoffs equals:
A) Zero
B) One
C) Infinity
D) A positive constant
Answer: A

29.

The dominance rule in game theory is used to:
A) Eliminate inferior strategies
B) Find maximum payoffs
C) Calculate Nash Equilibrium
D) Determine cooperative payoffs
Answer: A

30.

Game Theory fundamentally assumes that players are:
A) Irrational and emotional
B) Rational and strategic
C) Unaware of others’ choices
D) Myopic decision-makers
Answer: B