If a firm has a dominant strategy:
A) its optimal strategy depends on the play of rivals.
B) its optimal strategy is always the same, even if payoffs change.
C) it is determined by the behavior of only one key rival.
D) it receives the same profits regardless of the strategy of rivals.
E) its optimal strategy is independent of the play of rivals.

Question

Quizplus · Accepted Answer

A dominant strategy is a strategy that is always the best option for a player regardless of the strategies chosen by the other players. Therefore, the optimal strategy of a firm with a dominant strategy is independent of the play of rivals.

If a Firm Has a Dominant Strategy