Answer to Question #46215 in Microeconomics for mohammed abdu

Question

Consider the following payoff matrix:
1 2

1 $1,000 -$2,000
$2,000 -$1,000
Player A Strategy

-$1,000 $2,000
2 -$2,000 $1,000


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 preffer 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 preffer 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.