Question

Libertyville has two optometrists, dr. smith and dr. jones. each optometrist can choose to advertise his service or not. the incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. which of the following statements correctly describes dr. smith's strategy given what dr. jones may do?

a) dr. smith should advertise no matter what dr. jones does.
b) dr. smith should not advertise no matter what dr. jones does.
c) dr. smith should advertise only if dr. jones doesn't advertise.
d) dr. smith should advertise only if dr. jones advertises.

Answer 1

Dr. Smith should advertise only if Dr. Jones doesn't advertise. This strategy aims to maximize Dr. Smith's payoff, avoiding potential competition when Dr. Jones advertises and taking advantage of increased visibility when Dr. Jones doesn't advertise. The correct answer is Option C.

To determine the optimal strategy for Dr. Smith, we can analyze the payoff matrix. Let's denote the strategies as follows:

- A: Advertise

- N: Do not advertise

The payoff matrix is not provided in the question, but we can discuss the general principles:

- If Dr. Jones advertises:

- If Dr. Smith advertises, there might be a competitive situation with lower payoffs.

- If Dr. Smith does not advertise, he may avoid the competitive situation and achieve a higher payoff.

- If Dr. Jones does not advertise:

- If Dr. Smith advertises, he might attract more customers and achieve a higher payoff.

- If Dr. Smith does not advertise, the payoffs depend on the specific values in the matrix.

Given these considerations, the most reasonable option seems to be:

c) Dr. Smith should advertise only if Dr. Jones doesn't advertise.

This choice aims to avoid the potential competition if Dr. Jones advertises, while taking advantage of the opportunity to attract more customers if Dr. Jones doesn't advertise.