Answer to Question #46150 in Economics of Enterprise for [e-mail]

Question

Consider the following payoff matrix:

player B strategy
1 2
1000$ - 2000
player A strategy 1 2000$ -1000
-1000$ 2000
2 -2000 1000


a. Does Player A have a dominant strategy? Explain why or why not.

b. Does Player B have a dominant strategy? Explain why or why not

Answer 1

a. Player A has a dominant strategy, he will prefer the strategy 1 to minimize possible losses and maximize possible gains. In our case both Player A and Player B will chose strategy 1, so Player A will get $2000 and Player B will get $1000.
b. Player B has a dominant strategy too, he will prefer the strategy 1 to minimize possible losses. That's why, in our case both Player A and Player B will chose strategy 1, so Player A will get $2000 and Player B will get $1000.