(a) [Hint: you do not need to write down a payoff matrix to answer these questio
ID: 1155815 • Letter: #
Question
(a) [Hint: you do not need to write down a payoff matrix to answer these questions] (i) Define the meaning of the term "Dominant Strategy (3 marks) (ii) You are out of town at a conference, and decide to go out to dinner with nine other attendees at the conference, none of whom you know well. You all agree to split the total bill evenly between the ten of you, no matter what each person decides to eat, and you each make your own meal choice independently. There are only two items on the menu -fish and chicken and their price and value to you are as shown on the table: Meal choice: Fish $15 $20 Chicken S12 S10 Value to you Price on the menu Quickly prove that your dominant strategy is to choose the fish. (3 marks) (iii) Define the meaning of the term "Nash Equilibrium" (3 marks) (iv) If everyone has the same tastes as you, what will the Nash Equilibrium of this dining situation be? (3 marks) (v) If you all could discuss the situation together before choosing. quickly prove that you would all be better off if you all agreed to choose the chicken. marks) (3Explanation / Answer
i)A strategy is dominated if, paying little heed to what some other players do, the strategy procures a player a littler result than some other strategy. Thus, a strategy is dominated in the event that it is constantly better to play some other strategy, paying little mind to what adversaries may do.
ii)In this case, as the bill will be split evenly between the 10 of people and it doesn't matter what is the price of the product being ordered. One will try to maximise his/her utility by choosing the item that gives maximum value to his/her. Here, fish gives higher value than chicken($15>$12). Hence, fish is the dominant strategy.
iii)The Nash Equilibrium is an idea of game theory where the ideal result of a diversion is one where no player has a motivating force to veer off from his picked strategy subsequent to thinking about an adversary's decision. Generally, an individual can get no incremental advantage from evolving activities, expecting different players stay consistent in their techniques. A diversion may have various Nash Equilibria or none by any means.
iv)If everyone has same taste as mine, then no one would want to deviate to any other strategy to get more value. Hence, the nash equilibrium will be fish.
v)Using the maxima minima method, we see that the colum maximum are $ 20 and $12 whereas row minum are $12 and $10. Here, the dominant strategy where everyone would be better off is at $12. Hence, the highest value can be achieved by everyone if they opt for chicken.
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