Scenario: The matrix below shows the payoffs to two firms when they choose between two different strategies. The first number listed in each cell is the payoff to the row player, and the second number listed is the payoff to the column player.

-Refer to the scenario above.Which of the following is true of this game?
A) This game has two dominant strategy equilibria.
B) This game has multiple Nash equilibria.
C) This game has a unique Nash equilibrium.
D) This game does not have a dominant strategy equilibrium.

Question

Scenario: The matrix below shows the payoffs to two firms when they choose between two different strategies. The first number listed in each cell is the payoff to the row player, and the second number listed is the payoff to the column player.
 
-Refer to the scenario above.Which of the following is true of this game?
A) This game has two dominant strategy equilibria. 
B) This game has multiple Nash equilibria. 
C) This game has a unique Nash equilibrium. 
D) This game does not have a dominant strategy equilibrium.

Quizplus · Accepted Answer

This game has a unique Nash equilibrium, which is when both players choose their second strategy (bottom row, right column), resulting in a payoff of (3,3) for both players. There is no dominant strategy equilibrium because neither player has a dominant strategy, meaning there is no one strategy that is always superior to the other regardless of what the other player chooses. There are also no multiple Nash equilibria because there is only one possible combination of strategies where neither player has an incentive to deviate from their chosen strategy.

Scenario: the Matrix Below Shows the Payoffs to Two Firms