Your Rival Advertise Do not advertise You Advertise (5,5) (10,3) Do not (1,3) (2

Question

                                                      Your Rival

                                       Advertise                         Do not advertise

You     Advertise            (5,5)                                     (10,3)

          Do not                  (1,3)                                     (2,4)

         Advertise

The matrix above represents a one-shot game. Your payoff is the first number in the parantheses. Your rival's payoff is the second number.

Your dominant strategy is to:

a advertise b. don't advertise c. you don't have a dominant strategy d. none of the above 1

The nash equilibrium is:

a. (1,3) b. (2,4) c. (5,5) d. None of the above

Your rival's dominant strategy is to:

a. advertise b. don't advertise c. both a and b d. None of the above

Explanation / Answer

When both the players are rational, they use their dominant strategies if they have any. Since I always choose to advertise whether my rival chooses to advertise or not, Advertising is my dominant strategy. So the correct option is A.

Rival has no dominant strategy. So he follows what i do. And i do advertising. So he also chooses to advertise as his payoff is higher. Hence, the Nash equilibrium is C. (5, 5)

Rival has no dominant strategy. So the correct answer is D.

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