Table 14-5

Martin and Lewis each run one of the two bingo parlors in Schenectady. Both consider offering free rides to and from the parlors. Table 14-5 shows the payoff matrix containing the expected weekly profits for each bingo parlor.
-Refer to Table 14-5.Does Martin have a dominant strategy? If yes, what is it?

Question

Table 14-5
  
Martin and Lewis each run one of the two bingo parlors in Schenectady. Both consider offering free rides to and from the parlors. Table 14-5 shows the payoff matrix containing the expected weekly profits for each bingo parlor.
-Refer to Table 14-5.Does Martin have a dominant strategy? If yes, what is it?

Quizplus · Accepted Answer

Martin's dominant strategy is to offer free rides, regardless of what Lewis does. This is because, if Lewis also offers free rides, Martin still earns a profit of $5,000, which is better than the profit of $4,000 if he does not offer free rides. And if Lewis does not offer free rides, Martin earns a profit of $10,000, which is better than the profit of $9,000 if he does not offer free rides. Therefore, offering free rides is always the best choice for Martin.

Table 14-5 Martin and Lewis Each Run One of the Two Bingo