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.
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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.) For Firm A :- B. Strategy 2 is a dominant strategy
A strategy is a dominant strategy for a player if it yields the best payoff (for that player) no matter what strategies the other players choose. Firm A getting total payoff of 30 from Strategy 2 as compared to 18 from Strategy 1.
2.) For Firm B :- A. Strategy 1 is a dominant strategy
A strategy is a dominant strategy for a player if it yields the best payoff (for that player) no matter what strategies the other players choose. Firm B getting total payoff of 28 from Strategy 1 as compared to 22 from Strategy 2.
3.) D) Firm A chooses Strategy 2 and Firm B chooses Strategy 1.
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