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Find out the dominant strategy of both the players (if any).

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Please refer attachment for table.

Bernie and Manny both sell DVD players. Now suppose they must independently decide whether to charge high or low prices. To illustrate the problems encountered, consider the following profit payoff matrix faced by Bernie and Manny in a one- shot, simultaneous-move game. The first number in each cell is Bernie's profit payoff (in thousands); the second number is the profit payoff to Manny (also in thousands).

a. Briefly describe the Nash equilibrium concept.
b. Is there a dominant strategy for Bernie? Explain.
c. Is there a dominant strategy for Manny? If so, what is it? Explain.
d. Is there a Nash equilibrium in this game? If so, what is it? Explain.

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Solution Summary

This solution analyzes whether the players have dominant strategies in the given game. It also determines whether Nash Equilibrium is feasible in this game.

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a. Briefly describe the Nash equilibrium concept.
A Nash Equilibrium is the condition when there is no incentive for any player to deviate from it. No player in the game would like to take a different action as long as every other player remains the same. Any deviation from Nash Equilibrium will make ...

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  • MSc (Hons) , Birla Institute of Technology and Science, India
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