7. Solving for dominant strategies and the Nash equilibrium Suppose Gilberto and
ID: 1126123 • Letter: 7
Question
7. Solving for dominant strategies and the Nash equilibrium
Suppose Gilberto and Juanita are playing a game in which both must simultaneously choose the action Left or Right. The payoff matrix that follows shows the payoff each person will earn as a function of both of their choices. For example, the lower-right cell shows that if Gilberto chooses Right and Juanita chooses Right, Gilberto will receive a payoff of 3 and Juanita will receive a payoff of 7.
The only dominant strategy in this game is for _____ (choose one: gilbero or juanita) to choose ______ (choose one: left or right)
The outcome reflecting the unique Nash equilibrium in this game is as follows: Gilberto chooses _____ (choose one: left or right) and Juanita chooses _____ (choose one: left or right)
Juanita Left Right 4, 6 Left 6, 8 Gilberto Right7, 5 3,7Explanation / Answer
1>The only ...Juanita to choose right.
A strategy is dominant if, regardless of what any other players do, the strategy earns a player a larger payoff than any other.
2> The outcome.....Gilberto chooses left and Juantia chooses right.
It is the best for Gilberto to choose left if Juantia chooses his dominant strategy.