-Refer to Figure 2.1, which represents a noncooperative, one-time, static game. Firm B's secure strategy is:
A) Raise price if Firm A does not raise price.
B) Raise price if Firm A raises price.
C) Don't raise price if Firm A does not raise price.
D) Don't raise price if Firm A raises price.

Question

-Refer to Figure 2.1, which represents a noncooperative, one-time, static game. Firm B's secure strategy is:
A) Raise price if Firm A does not raise price. 
B) Raise price if Firm A raises price. 
C) Don't raise price if Firm A does not raise price. 
D) Don't raise price if Firm A raises price.

Quizplus · Accepted Answer

A secure strategy, often referred to as a safe or dominant strategy, is one that results in the best payoff for a player regardless of the actions of the other player(s). In this context, without seeing the specific payoffs in Figure 2.1, we can deduce the correct answer based on the definition of a secure strategy. Firm B's secure strategy would be to choose an action that minimizes potential losses or maximizes its payoff irrespective of Firm A's decision. Since we cannot determine the exact payoffs without the figure, the explanation is based on the general principle of choosing a secure strategy in game theory. Typically, not raising prices could be considered a secure strategy if it avoids potential losses from price wars or if the market is sensitive to price increases, but without the specific context or payoffs, this is a general deduction.