-Consider the noncooperative, one-time, static game depicted in Figure 2.11. Fly-by-night Airlines and Going-going-gone Airways are rival air carriers operating in the lucrative northeast corridor. Each air carrier is considering implementing a frequent-flyer program or continuing with their standard fare schedule. If both players adopt a maximin decision rule, what is the resulting strategy profile for this game?
A) {Standard, Standard}
B) {Standard, Frequent flyer}
C) {Frequent flyer, Standard}
D) {Frequent flyer, Frequent flyer}

Question

-Consider the noncooperative, one-time, static game depicted in Figure 2.11. Fly-by-night Airlines and Going-going-gone Airways are rival air carriers operating in the lucrative northeast corridor. Each air carrier is considering implementing a frequent-flyer program or continuing with their standard fare schedule. If both players adopt a maximin decision rule, what is the resulting strategy profile for this game?
A) {Standard, Standard} 
B) {Standard, Frequent flyer} 
C) {Frequent flyer, Standard} 
D) {Frequent flyer, Frequent flyer}

Quizplus · Accepted Answer

If both players adopt a maximin decision rule, they will choose the strategy that minimizes their maximum loss. In this game, the maximum loss for Fly-by-night Airlines is 10 if it implements a frequent-flyer program and Going-going-gone Airways implements a standard fare schedule. The maximum loss for Going-going-gone Airways is also 10 if it implements a frequent-flyer program and Fly-by-night Airlines implements a standard fare schedule. Therefore, both players will choose to implement a standard fare schedule, resulting in the strategy profile {Standard, Standard}.

-Consider the Noncooperative, One-Time, Static Game Depicted in Figure 2