1. Review Chapter 15, Table 15.4, Prisoner Dilemma. Suppose the game starts with both Jesse and Frank planning to “Stay Mum” in the lower right cell. Discuss how each player would evaluate the situation and decide whether to change decisions. If each player makes decisions to minimize the penalty, in which cell will this game end? Is there a Nash equilibrium?
2. Review Chapter 16, Section 16.1, Strategic View of Bargaining. Discuss the recent National Basketball Association bargaining. In this case each party needed to decide to either “bargain hard” or “accommodate.” What can we learn from this case?
3. Discuss the Prisoner’s Dilemma. Give a numerical example and show how each player would make decisions. (Chapter 15)
4. Explain the strategic view of bargaining. Present a numerical example and discuss how each player would make decisions. (Chapter 16).
5. Review Chapter 17, Section 17.1, Wheel of Cash game. Discuss why the game is like an investment opportunity that has uncertain outcomes. In a real-world situation, what might the investor do to increase the chances of success for the project?
6. Review Chapter 19, Section 19.5, Adverse Selection. This section on Amazon illustrates the case of adverse selection faced by Amazon. The vendors have more information about their performance than Amazon has. Explain how and why Amazon can use the customer reviews to control this problem.
