Commitment devices are necessary when:
A. people cannot correctly identify their dominant strategy.
B. following through on a threat or promise is not in a player's best interest.
C. players cannot trust that other players will avoid playing a dominated strategy.
D. commitments cannot be purchased.
Answer: B
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Refer to the market diagram. Relative to the surplus achieved under perfect competition, how much surplus is lost (deadweight loss) when there is a monopoly?
The following questions refer to the accompanying market diagram. PC and QC are the equilibrium price and quantity if the firm behaves competitively, and PM and QM are the equilibrium price and quantity if the firm is a simple monopoly.
a. E
b. H
c. E + H
d. D + G + E + H
Real GDP can be criticized as a measure of economic welfare because it
A) does not include the value of products produced in the household. B) does not take account of the degradation of environmental quality. C) does not include leisure time available to a society. D) All of the above answers are correct.
How would a decrease in the cost of production affect the market for video games?
a. Supply would decrease, leading to an increase in price and a reduction in quantity sold. b. Supply would decrease, leading to a reduction in price and a reduction in quantity sold. c. Supply would increase, leading to an increase in price and an increase in quantity sold. d. Supply would increase, leading to a reduction in price and an increase in quantity sold.
Jill, a U.S. citizen, uses some euros to purchase a bond issued by a French vineyard. This exchange
a. decreases U.S. net capital outflow. b. increases U.S. net capital outflow by more than the value of the bond. c. increases U.S. net capital outflow by the value of the bond. d. does not change U.S. net capital outflow.