Now, Let's Ask What Happens When the Parties Play a Game

question 27

Multiple Choice

Now, let's ask what happens when the parties play a game like the one in Figure 1,
Figure 1. The Electoral Reform Game-Example 1
except that the benefit to the large party of having disproportional rules is much less, and the penalties to the smaller party from disproportional electoral rules are lower. This might be because the smaller party has been attracting a larger electorate, whereas the large party has been losing voters. This new situation is modeled in Figure 3 below. Using Figure 3, answer the following questions.
Figure 3. The Electoral Reform Game-Example 2

-What strategy combination(s) form(s) a Nash equilibrium in the above game? Hint: use the form (Large strategy; Small strategy) .

• A) For; For
• B) For; Against and Against; For
• C) Against; For
• D) Against; Against
• E) For; Against

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Definitions:

World Supply

The total amount of a particular good or service that is available for purchase on the global market.

Quadrupled

To increase or be increased fourfold, a term often used in finance, demography, and general quantitative analysis to describe significant growth or expansion.

Market Power

The ability of a company or entity to influence the price and output levels in a market.

Oil Exports

The sale and shipment of crude oil or refined petroleum products from one country to another.