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 strategyB. Strategy 2 is a dominant strategyC. Neither strategy is the dominant strategy

Answer 1

B. Strategy 2 is a dominant strategy

Explanation:

A strategy can be considered a dominant strategy for a player if that player gets the best payoff yields no matter what strategies the other players choose. Going by the question, Firm A getting an overall payoff of 30 from Strategy 2 as compared to 18 from Strategy 1.

Therefore Strategy 2 is a dominant strategy