Scenario 13.8
Consider the following game:
-In game in Scenario 13.8, what will occur if IVY Corp. plays a maximin strategy?
A) $1, $10
B) $1, -$5000
C) $2, $0
D) $2, $2
E) There is a .25 chance of each outcome in that case.

Question

Scenario 13.8
Consider the following game: 
-In game in Scenario 13.8, what will occur if IVY Corp. plays a maximin strategy?
A) $1, $10 
B) $1, -$5000 
C) $2, $0 
D) $2, $2 
E) There is a .25 chance of each outcome in that case.

Quizplus · Accepted Answer

If IVY Corp. plays a maximin strategy, they will choose the option that guarantees the highest minimum payoff. In this case, the minimum payoff for choosing option A is $1, and the minimum payoff for choosing option B is -$5000. The minimum payoff for choosing option C is $0, which is higher than the minimum payoff for option A. Therefore, IVY Corp. will choose option C. The answer is not E because a maximin strategy considers the worst-case scenario, and there is no guarantee that each outcome will occur with equal likelihood.

Scenario 13.8 Consider the Following Game