Figure 8.9
-Consider Figure 8.9. Choosing a low price is

Question

Quizplus · Accepted Answer

A dominant strategy is a strategy that maximizes a player's payoff regardless of the other player's strategy. In this case, if David chooses a high price, his payoff will be $100 if Becky chooses a low quality product, and $50 if Becky chooses a high quality product. However, if David chooses a low price, his payoff will be $70 regardless of Becky's choice. Therefore, choosing a low price is a dominant strategy for David. Similarly, if Becky chooses a high price, her payoff will be $100 if David chooses a low quality product, and $50 if David chooses a high quality product. However, if Becky chooses a low price, her payoff will be $70 regardless of David's choice. Therefore, choosing a low price is a dominant strategy for Becky. Thus, the answer is C, which says that choosing a low price is a dominant strategy for both David and Becky.

Figure 8.9 -Consider Figure 8.9. Choosing a Low Price Is