The following provides information for a one-shot game. $\begin{array}{l}
\quad\quad\quad\quad\quad\quad\text { Firm B}\
\text { Firm A}
\begin{array}{|l|l|l|}
\hline &\text { Low Price } & \text { High Price }\
\hline & & \
\text { Low Price } & (2,2) & (10,-8)\
\hline & & \
\text { High Price } & (-8,10) & (15,15)\
\hline
\end{array}\end{array}$ What are the dominant strategies for firm A and firm B respectively?
A) (low price, high price)
B) (high price, low price)
C) (high price, high price)
D) Neither firm has a dominant strategy.

Question

The following provides information for a one-shot game. $\begin{array}{l}
\quad\quad\quad\quad\quad\quad\text { Firm B}\
\text { Firm A}
\begin{array}{|l|l|l|} 
\hline &\text { Low Price } & \text { High Price }\
\hline & & \
\text { Low Price } & (2,2) & (10,-8)\
\hline & & \
\text { High Price } & (-8,10) & (15,15)\
\hline
\end{array}\end{array}$ What are the dominant strategies for firm A and firm B respectively?
A) (low price, high price)
B) (high price, low price)
C) (high price, high price)
D) Neither firm has a dominant strategy.

Quizplus · Accepted Answer

Neither firm has a dominant strategy because the best response of each firm depends on the other firm's strategy. For example, if Firm A chooses a high price, then Firm B's best response is to also choose a high price. However, if Firm A chooses a low price, then Firm B's best response is to choose a low price. Therefore, neither firm has a dominant strategy.

The Following Provides Information for a One-Shot Game What Are the Dominant Strategies for Firm a and Firm