Which of the following statements represents a key point about strategic decision making?
A) Strategy is less important in nonconstant sum games than in constant sum games.
B) The payoffs in cooperative games will always be higher than in noncooperative games.
C) It is essential to understand your opponent's point of view and to deduce his or her likely responses to your actions.
D) Optimal strategies in cooperative games always lead to economically efficient outcomes.
C
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According to an article in the Wall Street Journal, unlike airlines, even elite hotels don't have sophisticated systems that can react quickly to changes in demand. Even if they could, many hoteliers say people don't respond that much to lower rates
"We've tested this, cutting our rates by $50 [per night], and we didn't see an appreciable response in occupancy," says Jim Schultenover, a vice president for Ritz-Carlton. Source: Jesse Drucker, "In Times of Belt-Tightening, We Seek Reasonable Rates," Wall Street Journal, April 6, 2001. Based on the information above, the demand for hotel rooms is A) perfectly elastic. B) inelastic. C) unit elastic. D) elastic.
The result that different auction styles in which the good goes to the winner with the highest valuation of the good generate the same amount of revenue is called
A) Revenue Equivalence Theorem. B) Marginal Revenue Theory. C) Auction Revenue Theory. D) First Bid Revenue Theorem.