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 organisations act in what they perceive to be their own bes…
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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 organisations 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
11 words worth learning before you sit the test, each with the sentence it appears in.
- apprehensive adjective
Anxious or fearful that something unpleasant or difficult may happen, especially concerning a future event
Investors grew apprehensive as the company's quarterly profits continued to decline sharply.
- bargaining power noun
The relative ability of one party in a negotiation to influence the terms and obtain a favourable deal
Smaller suppliers often lack the bargaining power needed to resist price cuts from retailers.
- concession noun
Something conceded or given up during negotiations in order to reach an agreement or end a disagreement
The union demanded major concessions from management before it would call off the strike.
- consortium noun
An association of several companies, organisations or individuals formed to carry out a joint project or bid
A consortium of regional airlines jointly bid for the new landing rights.
- entrust verb
To give someone responsibility for a task or valuable information, trusting them to handle it properly
The board entrusted the sensitive negotiations to its most experienced legal adviser.
- 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 energise trade.
- leverage noun
The power to influence people or outcomes, especially an advantage held by one side in a negotiation
Having several job offers gave her considerable leverage when negotiating her salary.
- lucrative adjective
Producing a large amount of profit or financial reward, especially from a business activity or investment
Consultancies that advise bidders on auction strategy have found the work extremely lucrative.
- mediation noun
Intervention by a neutral third party to help opposing sides resolve a dispute and reach an agreement
Skilled mediation prevented the factory dispute from escalating into a lengthy strike.
- repercussion noun
An unintended consequence occurring some time after an event or action
The merger had unforeseen repercussions for smaller suppliers across the region.
- track record noun
The record of past achievements or performance of a person, organisation or method, used to judge reliability
The firm's impressive track record in forecasting elections attracted several new clients.
Answers with explanations
- 27. C
The question asks what the **first paragraph** suggests about the software. It ends by saying that the software evaluates each player's ability to influence others and **hence predicts the course of events**, which paraphrases anticipating the **outcome** of **future events**. The other ideas fail: traditional negotiating practices are never mentioned, the paragraph describes how values are assigned but says nothing about accuracy affecting success, and it never claims that future negotiations will be dominated by the software. Answer: C.
- 28. D
The question asks when predicting behaviour **works best**. After van Oosten's warning that predictions fail when emotions take over, the paragraph says that sorting out people's **motivations** is **much easier** when **making money** is the main object, so prediction works best when profit is the primary motivator. Honesty about feelings and an understanding of the client's culture are never mentioned, and strong dislike of the other party is the very cause of unreliable predictions, the opposite of what the question needs. Answer: D.
- 29. D
The question asks what Milgrom told his clients to do after using the software. The text says the software determined that certain **big licences** were **over-valued**, so his clients were directed to obtain **a collection of smaller, less-expensive licences** instead, which paraphrases buying a **mix** of licences. Buying big licences is the reverse of this advice, while negotiating directly with the other parties and making one big offer at the end of the auction are never mentioned. Answer: D.
- 30. A
The question asks why the writer uses the ice-cream-seller example. Two sellers settle back-to-back and stay put, but **introducing a third seller** breaks the **stifling equilibrium** and energises the market, which shows the **impact** that **new competitors** have on business. Location is only part of the set-up, not the point drawn from it, and pricing changes are a side effect rather than the focus. The passage never says that businesses must follow a particular strategy. Answer: A.
- 31. B
The question asks what **Ponsatí believes** helps negotiations progress. In her paragraph, the writer says difficult negotiations can be **pushed along by neutral mediators**, and her idea is that a **computer** could do the job when a human mediator is unavailable. So progress comes when mediators or computers **take over** the bargaining. A proposal from one party would reveal its position, and the text says that loses bargaining power, so that idea is wrong. Following the rules of negotiating and allowing more time are not mentioned. Answer: B.
- 32. YES
The statement says the software **may be unhelpful** with **political issues**. The writer says that feeding the software accurate data is **especially tricky for political matters**, and that predictions **may become unreliable** when people act on emotions such as hatred instead of their best interests. Both points are the writer's own view and support the statement, so the answer is YES, not NO or NOT GIVEN. Answer: YES.
- 33. NO
The statement says Milgrom was **confident** about applying his software to the 2006 auction. The passage states that he was **apprehensive at first**, and apprehensive means anxious or fearful, which contradicts being confident. The later triumph describes the result, not his attitude when he began. The writer's claim therefore contradicts the statement, so the answer is NO, not NOT GIVEN. Answer: NO.
- 34. NOT GIVEN
The statement says Ponsatí thinks **mediation machines** are **inappropriate** in areas other than business. Ponsatí's only comment is that such machines could be **employed to push negotiations forward** by unlocking withheld information, and that comment is not tied to business or to any other field. She gives no view on other areas, and she is never described as rejecting the idea. The writer's claim is neither confirmed nor contradicted, so the answer is **NOT GIVEN**. Answer: NOT GIVEN.
- 35. NOT GIVEN
The statement claims that **military organisations refuse** to accept that game theory software could prevent wars. The final paragraph says opponents **on the brink of war** might one day use the software to exchange information, and that some **game theorists** think war outcomes could be learned without fighting. Nothing is said about how military organisations react or whether they refuse the idea. Absence of any view from the military makes the answer **NOT GIVEN**, not NO. Answer: NOT GIVEN.
- 36. E
The stem asks when the software **fails**, which paraphrases predictions becoming **unreliable**. Van Oosten says this happens when people give in to **non-rational emotions** such as hatred instead of pursuing their best interests, so the matching ending is the one about people allowing their **feelings** to influence decisions. The other endings belong to different speakers or topics, such as over-valued licences, early disclosure, mediation and future developments. Answer: E.
- 37. A
The stem asks what Milgrom's software is successful in **detecting**. The text says it **estimated the secret values** bidders placed on licences and **determined** that certain big licences were **over-valued**, which paraphrases something being thought worth more than it really is. The software is never said to detect a breakdown in talks, too much early disclosure of information, or a need for face-to-face negotiation. Answer: A.
- 38. D
The stem asks when Black's software is a **helpful tool**. The paragraph ends with Black saying that modelling makes clients **more inclined to look at future repercussions** when making business decisions, and designers can see **the patterns in possible outcomes**. That matches businesses considering possible future developments. The ending about something being thought worth more than it is relates to Milgrom's auction, not to Black's work. Answer: D.
- 39. C
The stem asks when negotiators **fall behind**. Ponsatí accepted that the first side to **disclose the maximum amount** it is willing to pay **loses considerable bargaining power** and can then be **pushed backward** by a clever opponent. Revealing so much so early is giving too much information to the other parties early on. The endings about feelings, breakdowns in discussion and future developments are linked to other speakers and examples. Answer: C.
- 40. B
The stem asks when Ponsatí's **mediation machine** is useful. If neither side reveals its concessions, negotiations can become very slow or **collapse**, and her idea was that a computer could do the mediator's job, pushing talks forward by using the parties' confidential positions. So the machine helps when discussions between the parties **begin to break down**. Early disclosure of information is the problem it avoids, not a situation in which it is useful. Answer: B.