Table 14-1

LimoZeenz and AirPorter and are the only two airport shuttle and limousine rental service companies in the mid-sized town of Shady Shores. Each firm must decide on whether to offer its customers a mid-week discount for airport transportation. Table 14-1 shows the payoff matrix for profits earned by each company based on either offering or not offering the discount.
-Refer to Table 14-1.Is there a dominant strategy for AirPorter and if so, what is it?

Question

Table 14-1
  
LimoZeenz and AirPorter and are the only two airport shuttle and limousine rental service companies in the mid-sized town of Shady Shores. Each firm must decide on whether to offer its customers a mid-week discount for airport transportation. Table 14-1 shows the payoff matrix for profits earned by each company based on either offering or not offering the discount.
-Refer to Table 14-1.Is there a dominant strategy for AirPorter and if so, what is it?

Quizplus · Accepted Answer

There is no dominant strategy for AirPorter because its outcome depends on what LimoZeenz does. The optimal choice for AirPorter is to consider LimoZeenz's potential response and base its decision on that. Therefore, the best choice is not to offer the mid-week discount if LimoZeenz is not offering it, but to offer it if LimoZeenz is offering it.

Table 14-1 LimoZeenz and AirPorter and Are the Only Two Airport Shuttle