Questions and answers

What is a dominant strategy in microeconomics?

What is a dominant strategy in microeconomics?

The dominant strategy is the best strategy chosen by players. When both parties have dominant strategies, equilibrium is stable as neither party has a motive to change.

What is dominant strategy example?

Hiring a lawyer is a dominant strategy for Firm A because if Firm B hires a lawyer, it is better to hire a lawyer and get $45 million instead of not hiring and getting only $25 million. If Firm B doesn’t hire a lawyer, it is better for Firm A to hire a lawyer and get $70 million instead of only $25 million.

What is a dominant strategy a dominant strategy is a strategy that?

2.1 Dominant strategy. “Dominant strategy” is a term in game theory that refers to the optimal option for a player among all the competitive strategy set, no matter how that player’s opponents may play, and the opposite strategy is called “inferior strategy.”

Does firm B have a dominant strategy?

B. there is no dominant strategy for either firm.

What is a strictly dominant strategy?

A strictly dominant strategy for a player yields a strictly higher expected payoff than. any other strategy available to the player, regardless of the strategies chosen by. everyone else.

How do you identify a dominated strategy?

A strategy is dominated if there always exist a course of action which results in higher payoff no matter what the opponent does. Identifying strategic dominance in a game is important in identifying its Nash equilibrium, an outcome which no player would want to change.

Can you have two dominant strategies?

A game can only have more than one dominant strategy per player, if the strategies are only weakly dominant (meaning it always does at least as well as every other strategy, but in some cases it may only tie other strategies, not beat them), and have the same payoffs for their player.

What is Lee’s dominant strategy?

What is Lee’s dominant strategy? Lee should always choose Don’t Clean.

What is strictly dominated strategy?

-a strictly dominant strategy is that strategy that always provides greater utility to a the player, no matter what the other player’s strategy is; A dominant strategy equilibrium is reached when each player chooses their own dominant strategy.

What is dominant strategy equilibrium?

A dominant strategy is a type of Nash equilibrium. A dominant strategy is a strategy which results in the best payoff for a player no matter what the other firm does but a Nash equilibrium represents a strategy which maximizes payoff given what the other player would do.

What is dominated strategy game theory?

In game theory, a dominant strategy is a series of maneuvers or decisions that gives a player the most benefit, or “gain,” no matter what the other players do. Sometimes it’s used intentionally by a calculating player, but it’s often used more or less accidentally, with the dominance only appearing…

What is the dominant strategy in game theory?

Dominant Strategy. In game theory, a dominant strategy is the course of action that results in the highest payoff for a player regardless of what the other player does.

What is the Nash equilibrium example?

The simplest example of Nash equilibrium is the coordination game, in which both players benefit from coordinating but may also hold individual preferences. For instance, suppose two friends wish to plan an evening around either partying or watching a movie.