Explore BrainMass
Share

Game Theory - dominant strategy for each firm

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

1. The two leading U.S. manufacturers of high performance radial tires must set their advertising strategies for the coming year. Each firm has two strategies available: maintain current advertising or increase advertising by 15%. The strategies available to the two firms, G and B, are presented in the payoff matrix below.
Firm B
Increase Adv. Maintain Adv.
Firm G Increase Adv. 27, 27 50, 12
Maintain Adv. 12, 50 45, 45

The entries in the individual cells are profits measured in millions of dollars. Firm G's outcome is listed before the
comma, and Firm B's outcome is listed after the comma.
Is there a dominant strategy for each firm? (Answer: Yes or No) What is it?

© BrainMass Inc. brainmass.com March 21, 2019, 9:28 pm ad1c9bdddf
https://brainmass.com/economics/game-theory/game-theory-dominant-strategy-for-each-firm-377238

Solution Preview

See the attached file. Thanks

1. The two leading U.S. manufacturers of high performance radial tires must set their advertising strategies for the coming year. Each firm has two strategies available: maintain current advertising or increase advertising by 15%. The strategies available to the two firms, G and B, are presented in the payoff matrix ...

Solution Summary

This post shows how to identify the dominant strategy for a firm in a game theory context, it there is one.

$2.19