HW #7: Sequential Games + Present Value

Question 1 (multiple choice)
Which of the following best describes a strategy?

A single action taken at one point in time

A complete plan of action for every possible situation

The payoff a player receives

Question 2 (multiple choice)
Which feature distinguishes a sequential-move game from a simultaneous-move game?

Players move without knowing payoffs

Players observe previous actions before choosing

Players cannot respond to others

Question 3 (numeric entry)
At an annual interest rate of 5%, solve for X in: X × 1.05 = 1.

Question 4 (numeric entry)
Present value of $50,000 received in 20 years at an annual interest rate of 5%.

Question 5 (text entry)
What method do we use to solve sequential games by reasoning from the end of the game backward?

Question 6 (multiple choice)
Why is backward induction powerful in sequential games?

It ignores future actions

It accounts for rational future responses

It assumes players cooperate

Question 7 (numeric entry)
Present value of a perpetuity paying $100 per year forever if the annual discount rate is 5%.

Question 8 (multiple choice)
In a game against “nature,” nature is best described as:

A strategic opponent

A random process with known probabilities

A cooperative player