-The above figure shows the payoff to two firms in an industry deciding to make an investment in worker safety.The dominant strategy for each firm
A) is to do the opposite of the other firm.
B) is to make the investment.
C) is to not make the investment.
D) does not exist.

Question

-The above figure shows the payoff to two firms in an industry deciding to make an investment in worker safety.The dominant strategy for each firm
A) is to do the opposite of the other firm. 
B) is to make the investment. 
C) is to not make the investment. 
D) does not exist.

Quizplus · Accepted Answer

A dominant strategy is one that results in the highest payoff for a firm regardless of what the other firm does. If the payoff matrix shows that not making the investment yields a higher payoff for each firm regardless of the other firm's decision, then not making the investment is the dominant strategy for both firms.

-The Above Figure Shows the Payoff to Two Firms in an Industry