Table 11.1 Godrickporter and Star Connections are the only two airport shuttle and limousine rental service companies in the mid-sized town of Godrick Hollow.Each firm must decide on whether to increase its advertising spending to compete for customers.Table 11.1 shows the payoff matrix for this advertising game.
-Refer to Table 11.1.Is there a dominant strategy for Godrickporter and, if so, what is it?

Question

Table 11.1  Godrickporter and Star Connections are the only two airport shuttle and limousine rental service companies in the mid-sized town of Godrick Hollow.Each firm must decide on whether to increase its advertising spending to compete for customers.Table 11.1 shows the payoff matrix for this advertising game.
-Refer to Table 11.1.Is there a dominant strategy for Godrickporter and, if so, what is it?

Quizplus · Accepted Answer

Godrickporter's dominant strategy is to increase its advertising spending, regardless of what Star Connections does. This is because if both firms increase their advertising spending, Godrickporter will still earn $10,000, which is higher than the $8,000 it would earn if it did not increase its spending. Similarly, if Star Connections does not increase its spending, Godrickporter will earn $14,000 by increasing its spending, which is higher than the $12,000 it would earn by not increasing its spending. Therefore, regardless of the actions of Star Connections, Godrickporter's best decision is to increase its advertising spending.

Table 111 Godrickporter and Star Connections Are the Only Two