Scenario: Two rival firms have to choose between two strategies to maximize their benefits. The two alternative strategies available are Strategy X and Strategy Y. The matrix below shows the respective payoffs for each strategy chosen by the firms. The first number listed in each cell is the payoff to the row player, and the second number listed is the payoff to the column player.

-Refer to the scenario above.This game ________.
A) has two Nash equilibria
B) has a unique Nash equilibrium
C) has a dominant strategy equilibrium
D) does not have a Nash equilibrium

Question

Scenario: Two rival firms have to choose between two strategies to maximize their benefits. The two alternative strategies available are Strategy X and Strategy Y. The matrix below shows the respective payoffs for each strategy chosen by the firms. The first number listed in each cell is the payoff to the row player, and the second number listed is the payoff to the column player.
 
-Refer to the scenario above.This game ________.
A) has two Nash equilibria 
B) has a unique Nash equilibrium 
C) has a dominant strategy equilibrium 
D) does not have a Nash equilibrium

Quizplus · Accepted Answer

The game has two Nash equilibria, one at (Strategy X, Strategy X) with payoffs of (6, 6) and one at (Strategy Y, Strategy Y) with payoffs of (5, 5). Neither player has a dominant strategy, so they must consider their opponent's possible actions and payoffs in choosing their strategy.

Scenario: Two Rival Firms Have to Choose Between Two Strategies