Explain the difference between game theory’s use as a predictive tool and its use as a prescriptive.

Explain the difference between game theory’s use as a
predictive tool and its use as a prescriptive tool. In what types of real-world
settings might these two uses be most important?

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U1. Determine which of the following situations describe
games and which describe decisions. In each case, indicate what specific
features of the situation caused you to classify it as you did.

(a) A party nominee for president of the United States
must choose whether to use private financing or public financing for her
campaign.

(b) Frugal Fred receives a $20 gift card for downloadable
music and must choose whether to purchase individual songs or whole albums.

(c) Beautiful Belle receives 100 replies to her online
dating profile and must choose whether to reply to each of them.

(d) NBC chooses how to distribute its television shows
online this season. The executives consider Amazon.com, iTunes, and/or NBC.
com. The fee they might pay to Amazon or to iTunes is open to negotiation.

(e) China chooses a level of tariffs to apply to American
imports.

 

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