When Does a Rational Decision Maker Take an Action

question 2

Multiple Choice

When does a rational decision maker take an action?

• A) only if the marginal benefit is less than the marginal cost
• B) only if the marginal benefit is greater than the marginal cost
• C) only if the average benefit is greater than the average cost
• D) only if the marginal benefit is greater than both the average cost and the marginal cost

Understand the concept of the prisoners' dilemma and its implications in game theory.

Grasp the idea of Nash equilibrium and identify it in different strategic situations.

Interpret payoff matrices and predict outcomes in games of strategy.

Distinguish between dominant and maximin strategies and their applications.

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