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The figure below shows a payoff table for two firms, A and B. Which strategy is a dominant strategy for Firm A? Firm B?

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#56 The figure below shows a payoff table for two firms, A and B. Which strategy is a dominant strategy for Firm A?

A) Strategy I
B) Strategy II
C) Strategy III
D) Strategy IV
E) None of the strategies available to firm A is a dominant strategy

#57 Which strategy is a dominant strategy for Firm B?

A) Strategy I
B) Strategy II
C) Strategy III
D) Strategy IV
E) None of the strategies available to firm B is a dominant strategy

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Which strategy is a dominant strategy for Firm A?

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56. FIRM A

The answer is B.

See cells A and C. The payoff that Firm A gets, when Firm B plays III is $300 if Firm A plays I or $600 if Firm A plays II. Which payoff is greater for Firm A? Obviously for Firm A it is $600. Hence, if Firm B plays III, then Firm A will prefer to play II.

Now, in order for this to be the dominant strategy playing II ...

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