Exam 3 Study Guide - professor kono PDF

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EXAM 3 STUDY GUIDE POL3, SPRING 2018 The third exam will cover the following material: I. GAME THEORY WRAP-UP 1. I will present you with a game of imperfect information similar to the one discussed in lecture (Lecture 6) and in the BDM text (pp.159-163). In this game, Nature will move first and determine Player 1’s type with some probability R. Given the players’ payoffs (which I will provide), you should be able to answer the following kinds of questions: a) Suppose I provide you with a value of R in something like the US-North Korea game. You should be able to say what kind of compromise North Korea would accept. More generally, you should be able to relate changes in R to changes in the acceptable compromise. b) For any given value of R, you should be able to say what the equilibrium will be. If the equilibrium is different for different values of R, you should be able to explain why in words. c) Consider the imperfect-information game shown in Lecture 6. What are two things the US could do to get North Korea to accept a better (for the US) compromise? (Hint: Think about what the US could do to influence R, and also how s (the cost of sanctions) affects North Korea’s sanctions payoff.) Explain why these US actions would affect North Korea’s willingness to compromise. d) In preparing for this question, I strongly encourage you to work through the practice problem posted on the course site (“exam 3 practice problems.pdf”). The question on the exam will be very similar to the practice imperfect-information game. I provide solutions to the practice problems, so working through them will enable you to figure out whether you’ve mastered the material. Note: For the sake of time/simplicity, I will give you each player’s payoffs—represented as numbers—in the imperfect-information game. That is, you will NOT have to calculate these payoffs using values of p, k, etc. However, you may have to perform such calculations in the questions concerning asymmetric information, discussed below. 2. You should understand the difference between “cheap talk” and “costly signals”. You should also be able to relate these concepts to the imperfect-information game discussed above. For example, you should be able to say how cheap talk / costly signals might affect the value of R. 3. You should understand, and be able to explain, why the ability to credibly commit can allow players to “win” games.

II. EXPLANATIONS FOR WAR 4. You should understand why the existence of war is puzzling (hint: it is ex post inefficient, and you should understand what this means). 5. In class, we discussed how uncertainty/asymmetric information can lead to war. Specifically, we discussed how asymmetric information about both p (the probability of one side winning) and k (the cost of war) can lead to international conflict. You should understand intuitively why each type of asymmetric information matters. You should also be able to solve numerical problems involving these parameters—the problems will be very similar to the ones in the slides. For example, you should be able to show how different estimates of p can eliminate a zone of agreement between two sides, and also how different estimates of k can lead to a “zone of error” in which one side proposes compromises that the other will not accept. Again, I encourage you to work through the practice problem posted on the course site (“exam 3 practice problems.pdf”). 6. You should understand why commitment problems and indivisible goods can lead to war. You will NOT have to solve any mathematical problems involving these concepts. 7. You should understand each of the following domestic explanations for war: audience costs, diversionary war, and the resurrection hypothesis. You should also be familiar with the policy prescriptions (discussed in class) that stem from each. You do NOT need to understand the audience cost game that BDM presents on pp.215-217. Good luck!...