Scenario: Suppose two soda brands, Mountain Dew and Mello Yello, are trying to decide whether to launch advertising campaigns for their respective products. These decisions will be taken simultaneously, the brands will not be cooperating, and we will assume each brand's strategist knows her own and her opponent's payoffs in all cases. The payoff matrix for this game is shown below.

-Refer to the scenario above.Is there a dominant strategy equilibrium?
A) No
B) Yes: Mountain Dew does not advertise, Mello Yello does not advertise
C) Yes: Mountain Dew advertises, Mello Yello advertises
D) Yes: Mountain Dew advertises, Mello Yello does not advertise

Question

Scenario: Suppose two soda brands, Mountain Dew and Mello Yello, are trying to decide whether to launch advertising campaigns for their respective products. These decisions will be taken simultaneously, the brands will not be cooperating, and we will assume each brand's strategist knows her own and her opponent's payoffs in all cases. The payoff matrix for this game is shown below.
 
-Refer to the scenario above.Is there a dominant strategy equilibrium?
A) No 
B) Yes: Mountain Dew does not advertise, Mello Yello does not advertise 
C) Yes: Mountain Dew advertises, Mello Yello advertises 
D) Yes: Mountain Dew advertises, Mello Yello does not advertise

Quizplus · Accepted Answer

A dominant strategy equilibrium occurs when each player's best response does not change regardless of what the other player does. In this scenario, if both Mountain Dew and Mello Yello find their best strategy is to advertise regardless of the other's action, it indicates a dominant strategy equilibrium where both choose to advertise.

Scenario: Suppose Two Soda Brands, Mountain Dew and Mello Yello