| 1. What is the 'Meeting in New York City' game about? | Answer: It involves two prisoners, Sam and Pat, who must simultaneously choose between meeting at the Empire State Building or Grand Central Station. Their actions are unobservable and non-contractible. |
| . What are the possible payoffs in the 'Meeting in New York City' game? | Answer:
(Empire State, Empire State) = (100, 100)
(Grand Central, Grand Central) = (100, 100)
Any other combination = (0, 0) |
| 3. What are the Nash Equilibria in the 'Meeting in New York City' game? | Answer:
Both choose Empire State Building
Both choose Grand Central Station
Mixed strategy where each action is chosen 50% of the time. |
| 4. What is a Nash Equilibrium? | It is a situation where no player can improve their payoff by unilaterally changing their strategy. |
| 5. What is the general rule regarding the number of Nash Equilibria in a game? | Answer: The number of Nash Equilibria is odd, or the game itself is odd. |
| What are the limitations of Nash Equilibrium? | Answer: While useful as a benchmark, it doesn’t always capture the complexities of real-world negotiations. |
| 7. What is John Nash's bargaining problem scenario? | Answer: Two rational individuals (Ross and Steeve) must split a pizza, with any split represented as (p, 1-p), where p is the portion for Ross. |
| 9. What criteria must Nash’s bargaining solution satisfy? | Answer:
Independence of Utility Units
Pareto Property
Symmetry
Individual Rationality
Independence of Irrelevant Alternatives |
| 11. What are the key challenges in distributive bargaining? | Answer: You don’t know the other party’s Threat Point, Target Point, or Cost of Walking Away. |
| 12. How can you overcome challenges in distributive bargaining? | Answer: By learning through communication. |
| 13. What are some key concepts in distributive bargaining? | Positions: Opening Offers, Anchoring
Opening Stance: Signal willingness to compromise or fight
Initial Concessions: Decide whether to concede early or hold firm
Pattern of Concessions: Shapes expectations
Final Offers: Communication matters
Bayesian Updating: Adjusting beliefs based on new information |
| 14. What is anchoring in negotiations? | Answer: It’s when the first offer heavily influences decisions, especially under uncertainty. |
| 15. What practical tips can improve negotiation outcomes? | Answer:
Be aware of anchoring effects.
Communicate effectively to learn about the other party’s threat and target points.
Use concession patterns strategically to influence expectations.
Understand that people update their beliefs based on the information you provide. |
| Independence of Utility Units: | The solution doesn’t change if you change the way you measure satisfaction (utility). For example, if you double everyone's happiness points, the solution should still be the same. |
| Pareto Property (Pareto Efficiency): | A solution is good if you can’t make one person better off without making someone else worse off. In other words, no resources are wasted, and everyone is as satisfied as possible without hurting others. |
| Symmetry | If the players are in the same situation (same options, same preferences), they should get the same outcome. No one should be favored just because of who they are. |
| Individual Rationality: | Each person should get at least as much as they could get on their own, without cooperating. Otherwise, they wouldn’t have any reason to participate in the deal. |
| Independence of Irrelevant Alternatives: | If a solution is the best among a set of options, and some unrelated option is removed, the solution should still be the same. Removing options that no one would pick shouldn’t affect the final decision. |
