ELI5 - Theories & Concepts
- Complete Exam AI2156 - June 2022
- 1. Determine an individuals risk based on a utility function of wealth
- 2. Deterring incumbents to enter a Market
- 3. Identify a sub-game of perfect equilibrium
- 4. If two variables are strategic complements, then…
- 5. The Classical Microeconomic Model
- 6. How do you minimise risk of equilibrium with adverse selection?
- 7. A important parameter in the Folk Theorem
- 8. Define a separating equilibrium?
- 9. Hidden actions causes what?
- 10. Pricing in the Bertrand oligopoly model
- 11. Identify the dominant strategy and Nash Equilibria in a payoff matrix
- 12. Two firms, Compute Price and Quantity in the Cournot & Stackelberg Model
- 13. Interpret indifference curves for two types of insurance customers
- 14. Fixed-Fee, Hire and Sharing Contracts
- 15. Deadweight loss on environment
- 16. Determine the property developer’s certainty
- Complete Exam AI2156 - August 2022
- 1. Identify the coefficient of absolute risk aversion given by a equation
- 2. When is entry accommodated by the incumbent firm?
- 3. Identify the subgame of perfect equilibrium
- 4. Strategic Substitutes and their reaction functions
- 5. The main drawback with the principal-agent approach to explain the boundary of a firm? ⚠️
- 6. The theorem behind cooperative equilibrium prisoner’s dilemma?
- 7. What is a property right?
- 8. Important parameter in model of monopolistic competition
- 9. What is a pooling equilibrium?
- 10. A hidden characteristic is typically the reason
- 11. Identify the dominant strategy and Nash Equilibria in a payoff matrix
- 12. Determine the price and quantity each firm produces in a Cournot oligopoly model
- 13. Avoid Adverse Selection by providing a menu of Contracts
- 14. Difference between a complete and incomplete contract
- 15. Examples of Principal agent problems
- 16. Certainty Equivalent of this project
- Exercise 2 - Oligopoly Theory
- Incomplete Exam AI2156 - June 2021
Complete Exam AI2156 - June 2022
1. Determine an individuals risk based on a utility function of wealth
b) Risk-averse
c) Risk-loving
d) None of the above
2. Deterring incumbents to enter a Market
a) When there is no need for the incumbent firm to take any action.
b) When an action by the incumbent firm prevents potential entrents from entering.
c) When the incumbent firm is risk-neutral.
d) When every action taken by incumbent firm is observable.
3. Identify a sub-game of perfect equilibrium
Firm A starts by choosing strategy A1 or A2, and then firm B chooses strategy B1 or B2. Here (xy) means that firm A receives payoff x and firm B payoff y. Which of the payoffs is the result of a subgame perfect equilibrium?
4. If two variables are strategic complements, then…
a) an investment makes the incumbent firm tough.
b) an investment makes the incumbent firm soft.
c) the reaction functions are upward sloping.
d) the reaction functions are downward sloping.
5. The Classical Microeconomic Model
a) a principal
b) a black box
c) a nexus of contracts
d) an agent
6. How do you minimise risk of equilibrium with adverse selection?
a) Contractor
b) Well defined property rights
c) Reaction functions
d) Screening
7. A important parameter in the Folk Theorem
8. Define a separating equilibrium?
9. Hidden actions causes what?
a) adverse selection. b) transaction costs. c) moral hazard. d) complete contracts.
10. Pricing in the Bertrand oligopoly model
a) One of two firms sets the price first, and then the second firm sets it price.
b) The price is set in order to maximize the total profit of the firms.
c) The strategic variable is quantity.
d) The equilibrium price is the same as the price-taking competitive equilibrium price.
11. Identify the dominant strategy and Nash Equilibria in a payoff matrix
Here (x,y) means that Player A receives payoff x and Player B payoff y. a) Is there a dominant strategy for any of the players? Motivate your answer. (3 p) b) Determine the Nash equilibria in pure strategies for this game. (3 p)
12. Two firms, Compute Price and Quantity in the Cournot & Stackelberg Model
𝐶(𝑞) = 2𝑞
The demand function for the product the firms produce is
𝑄 = 20 − 𝑝
Determine the price of the good and the quantity each firm produces in the following two cases: a) In a Cournot oligopoly model. (3 p)
b) In a Stackelberg oligopoly model when Firm 2 is the leader. (3 p)
13. Interpret indifference curves for two types of insurance customers
14. Fixed-Fee, Hire and Sharing Contracts
15. Deadweight loss on environment
16. Determine the property developer’s certainty
Payoff (mEUR) | Probability (%) |
10 | 0,4 |
50 | 0,4 |
100 | 0,2 |
Determine the property developer’s certainty equivalent of this project. (4 p)
Complete Exam AI2156 - August 2022
1. Identify the coefficient of absolute risk aversion given by a equation
2. When is entry accommodated by the incumbent firm?
a) When there is no need for the incumbent firm to take any action. b) When an action by the incumbent firm prevents potential entrants from entering. c) When every action taken by incumbent firm is observable. d) None of the above.
3. Identify the subgame of perfect equilibrium
Firm A starts by choosing strategy A1 or A2, and then firm B chooses strategy B1 or B2. Here (x,y) means that firm A receives payoff x and firm B payoff y. Which of the payoffs is the result of a subgame perfect equilibrium? a) (6,2) b) (5,7) c) (1,8) d) (2,3)
4. Strategic Substitutes and their reaction functions
a) an investment makes the incumbent firm tough. b) an investment makes the incumbent firm soft. c) the reaction functions are upward sloping. d) the reaction functions are downward sloping
5. The main drawback with the principal-agent approach to explain the boundary of a firm? ⚠️
a) It is a black box. b) It disregards the fact that it is costly to write contracts. c) It does not take into account the fact that there is a nexus of contracts. d) It violates the conditions of the Coase theorem.
6. The theorem behind cooperative equilibrium prisoner’s dilemma?
a) the Coase theorem. b) the property rights solution. c) Bertrand competition. d) a Folk theorem.
7. What is a property right?
8. Important parameter in model of monopolistic competition
9. What is a pooling equilibrium?
10. A hidden characteristic is typically the reason
11. Identify the dominant strategy and Nash Equilibria in a payoff matrix
Here (x,y) means that Player A receives payoff x and Player B payoff y. a) Is there a dominant strategy for any of the players? Motivate your answer. (3 p) b) Determine the Nash equilibria in pure strategies for this game. (3 p)
12. Determine the price and quantity each firm produces in a Cournot oligopoly model
13. Avoid Adverse Selection by providing a menu of Contracts
14. Difference between a complete and incomplete contract
15. Examples of Principal agent problems
16. Certainty Equivalent of this project
Payoff (mEUR) | Probability (%) |
-3 | 0,55 |
12 | 0,3 |
24 | 0,15 |
Determine the property developer’s certainty equivalent of this project. (4 p)