Question

Two firms play the game below. Each must choose strategy 1 or 2. They choose their strategies simultaneously and without cooperating with each other. Firm A?'s payoffs are on the left side of each? cell, and Firm B?'s payoffs are on the right.

Firm A

Firm B

Strategy 1

Strategy 2

Strategy 1 10, 16 8, 12
Strategy 2 13, 12 17, 10

Determine the dominant strategy for each firm.

1) For Firm A :

A. Strategy 1 is a dominant strategy

B. Strategy 2 is a dominant strategy

C. Neither strategy is the dominant strategy

2) For Firm B :

A. Strategy 1 is a dominant strategy

B. Strategy 2 is a dominant strategy

C. Neither strategy is the dominant strategy

3) Because both players have dominant? strategies, this game has an equilibrium in dominant strategies.

A) Both firms choose Strategy 1

B) Both firms choose Strategy 2

C) Firm A chooses Strategy 1 and Firm B chooses Strategy 2

D) Firm A chooses Strategy 2 and Firm B chooses Strategy 1

Answer 1

1.) For Firm A: - B. Strategy 2 is a dominant strategy

A strategy is a governing strategy for a performer if it yields the best payment (for that player) no matter what strategies the other performers choose. Firm A receiving total payment of 30 from Strategy 2 as associated to 18 from Strategy 1.

2.) For Firm B: - A. Strategy 1 is a dominant strategy

A strategy is a governing strategy for a performer if it yields the best payment (for that player) no matter what strategies the other performers choose. Firm B getting total payment of 28 from Strategy 1 as associated to 22 from Strategy 2.

3.) D) Firm A chooses Strategy 2 and Firm B chooses Strategy 1.