Game theory
Read Game theory and check the IELTS Reading answers. According to game theory, our chances of success in negotiations are based on the choices of others. Computer models have been developed to work out how events will unfold as people and organizations act in what they perceive to be their own bes…
Passage preview
According to game theory, our chances of success in negotiations are based on the choices of others. Computer models have been developed to work out how events will unfold as people and organizations act in what they perceive to be their own best interests. Numerical values are placed on the goals, motivations, and influence of players, and likely options are considered. Game theory software then evaluates the ability of each of those players to influence others, and hence predicts the course of events.
Vocabulary from this passage
5 words worth learning before you sit the test, each with the sentence it appears in.
- consortium noun
An association, typically of several companies
A consortium of bidders saved over a billion dollars by following customized software advice.
- equilibrium noun
A state in which opposing forces or influences are balanced
The entry of a new competitor can break a stifling market equilibrium and energize trade.
- lucrative adjective
Producing a great deal of profit
Using game theory software to model high-stakes auctions has proven to be extremely lucrative.
- mediation noun
Intervention in a dispute in order to resolve it; arbitration
Computerized mediation machines can unlock confidential information to push stalled negotiations forward.
- repercussion noun
An unintended consequence occurring some time after an event or action
Modeling allows businesses to analyze the future repercussions of their current strategic decisions.
Answers with explanations
- 27. C
The answer is **C**. The first paragraph concludes by stating that the software **predicts the course of events**. This matches the idea of **anticipating the outcome** of future situations. Options A, B, and D are not the primary focus of the writer's suggestion in this specific paragraph.
- 28. D
The answer is **D**. Van Oosten explains that predicting behavior is tricky in politics but **much easier** when **making money** is the goal. This indicates that predicting what people will do works best when **profit** is the primary motivator.
- 29. D
The answer is **D**. After the software identified that big licenses were overvalued, Dr. Milgrom advised his clients to purchase a **collection of smaller, less expensive licenses**, which effectively means purchasing a **mix of licenses** rather than one large one.
- 30. A
The answer is **A**. The ice-cream seller example is used to show how a **third seller** (a new competitor) breaks the existing **equilibrium** and causes change. This illustrates the **impact new competitors have** on a market or business scenario.
- 31. B
The answer is **B**. Dr. Ponsati suggests that when negotiations stall, a **computer** or a **human mediator** can step in to handle confidential data and propose a split-the-difference agreement, which pushes the **bargaining process** forward.
- 32. YES
The answer is **YES**. The writer explicitly mentions that for **political matters**, data accuracy is **especially tricky**, suggesting the software may be **unhelpful** or unreliable in this specific context.
- 33. NO
The answer is **NO**. The statement says Milgrom was **confident**, but the passage states he was **apprehensive at first**. Since 'apprehensive' means anxious or fearful, it contradicts the idea of being confident.
- 34. NOT GIVEN
- 35. NOT GIVEN
- 36. E
The answer is **E**. Van Oosten notes that software predictions fail when people act on **non-rational emotions** (feelings) like hatred instead of their best interests. This corresponds to the ending about **feelings influencing decisions**.
- 37. A
The answer is **A**. Milgrom’s software detected that some licenses were **overvalued**, which is another way of saying that **something is thought to be worth more than it really is**.
- 38. D
The answer is **D**. Dr. Black states that game theory modeling encourages clients to consider **future repercussions**, which matches the ending about considering **possible future developments** when deciding on business paths.
- 39. C
The answer is **C**. Ponsati argues that disclosing a maximum price early results in a loss of **leverage** and power. This matches the idea of negotiators falling behind if **too much information is given... early on**.
- 40. B
The answer is **B**. The 'mediation machine' is described as a tool to unlock information and push negotiations forward, especially when they would otherwise **collapse** or slow down. This corresponds to when **discussions... begin to break down**.