Alma,Marcus,and Carlos are competitors in a local market,and each is trying to decide if it is worthwhile to advertise.If all of them advertise,each will earn a profit of $2000.If none of them advertise,each will earn a profit of $8000.If only one of them advertises,the one who advertises will earn a profit of $6000 and the other two will each earn $5000.If two of them advertise,those two will each earn a profit of $4000 and the other one will earn $3000.If all three follow their dominant strategy,what will Alma do and how much will she earn
A)advertise and earn $2000
B)advertise and earn $4000
C)not advertise and earn $5000
D)not advertise and earn $8000

Question

Quizplus · Accepted Answer

To determine the dominant strategy for each player, we need to compare the payoffs for each possible combination of strategies.

If Alma advertises:
- If Marcus and Carlos also advertise, Alma earns $2000. 
- If Marcus and Carlos do not advertise, Alma earns $6000. 
- If only Marcus or only Carlos advertise, Alma earns $5000.

Therefore, Alma's dominant strategy is to not advertise, as she earns a higher profit of $6000 by not advertising regardless of what the other players do.

Following the same reasoning, Marcus and Carlos will also choose not to advertise, as they also earn a higher profit of $6000 by not advertising regardless of what the other players do.

Therefore, if all three players follow their dominant strategy, none of them will advertise and each will earn a profit of $8000.

Alma,Marcus,and Carlos Are Competitors in a Local Market,and Each Is