Refer to the following payoff matrix:
$\begin{array}{r}
\text { Player } 2\
\text { Player } 1
\begin{array}{|l|l|l|}
\hline& \text { Low } Q & \text { High } Q \
\hline & & \
\text { Low } Q & \$ 50, \$ 5 & \$ 15, \$ 30 \
\hline & & \
\text { High } Q & \$ 40, \$ 2 & \$ 2, \$ 1\
\hline
\end{array}
\end{array}$ Suppose the production game depicted in the payoff matrix is a sequential-move game.Identify the strategy leading to a first-mover advantage for player 2.
A) Player 2 moves first and plays Low Q. Observing player 2's move, player 1's best response is to play Low Q.
B) Player 2 moves first and plays High Q. Observing player 2's move, player 1's best response is to play Low Q.
C) Player 1 moves first and plays Low Q. Observing player 1's move, player 2's best response is to play High Q.
D) Player 2 moves first and plays High Q. Observing player 2's move, player 1's best response is to play High Q.

Question

Refer to the following payoff matrix:
$\begin{array}{r}
\text { Player } 2\
\text { Player } 1
\begin{array}{|l|l|l|} 
\hline& \text { Low } Q & \text { High } Q \
\hline & & \
\text { Low } Q & \$ 50, \$ 5 & \$ 15, \$ 30 \
\hline & & \
\text { High } Q & \$ 40, \$ 2 & \$ 2, \$ 1\
\hline
\end{array}
\end{array}$ Suppose the production game depicted in the payoff matrix is a sequential-move game.Identify the strategy leading to a first-mover advantage for player 2.
A) Player 2 moves first and plays Low Q. Observing player 2's move, player 1's best response is to play Low Q.
B) Player 2 moves first and plays High Q. Observing player 2's move, player 1's best response is to play Low Q.
C) Player 1 moves first and plays Low Q. Observing player 1's move, player 2's best response is to play High Q.
D) Player 2 moves first and plays High Q. Observing player 2's move, player 1's best response is to play High Q.

Quizplus · Accepted Answer

In a sequential-move game, the first mover can influence the subsequent moves of the other player. If Player 2 moves first and chooses High Q, Player 1's best response, to maximize their payoff, is to choose Low Q, which gives Player 1 a payoff of $15 and Player 2 a payoff of $30. This strategy gives Player 2 a first-mover advantage by allowing them to secure a higher payoff than in any other scenario.

Refer to the Following Payoff Matrix Suppose the Production Game Depicted in the Payoff Matrix Is