Suppose that firm A finds itself facing the following payoff matrix in its rivalry with firm B:
A threatens to play strategy W.This threat is:
A) credible because the Nash equilibrium occurs where A plays W and B plays Z.
B) credible because the joint optimal solution occurs where A plays W and B plays Z.
C) not credible because A's dominant strategy is to play X.
D) credible because A's dominant strategy is to play W.
E) not credible because B will never play strategy Z.

Question

Suppose that firm A finds itself facing the following payoff matrix in its rivalry with firm B: 
A threatens to play strategy W.This threat is:
A) credible because the Nash equilibrium occurs where A plays W and B plays Z. 
B) credible because the joint optimal solution occurs where A plays W and B plays Z. 
C) not credible because A's dominant strategy is to play X. 
D) credible because A's dominant strategy is to play W. 
E) not credible because B will never play strategy Z.

Quizplus · Accepted Answer

The Answer of Suppose that firm A finds itself facing the following payoff matrix in its rivalry with firm B: 
A threatens to play strategy W.This threat is:
A) credible because the Nash equilibrium occurs where A plays W and B plays Z. 
B) credible because the joint optimal solution occurs where A plays W and B plays Z. 
C) not credible because A's dominant strategy is to play X. 
D) credible because A's dominant strategy is to play W. 
E) not credible because B will never play strategy Z.

Suppose That Firm a Finds Itself Facing the Following Payoff