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    Finding dominant and optimal strategy

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    From the following payoff matrix, where the payoffs are the profits or losses of the two firms, determine (a) whether firm A has a dominant strategy, (b) whether firm B has a dominant strategy, (c) the optimal strategy for each firm, and (d) the Nash equilibrium, if there is one.

    Firm B
    ___________
    Low Price High Price
    __________________________________________________________________
    Low Price (1,1) (3, -1)
    Firm A
    High Price (-1,3) (4,2)
    ___________________________________________________________________

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    https://brainmass.com/business/strategy-and-business-analysis/finding-dominant-and-optimal-strategy-242154

    Solution Preview

    Solution:

    (a) whether firm A has a dominant strategy

    In case firm B charges a low price,
    Firm A will earn a profit of 1 when it charges a low price
    Firm A will earn a profit of -1(i.e. a loss of 1) when it charges a high price.

    In case firm B charges a high price,
    Firm A will make a profit ...

    Solution Summary

    Solution describes the steps to find out dominant and optimal strategy for each player.

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