George and Henry sell wool sweaters during the winter in front of the student un

Question

George and Henry sell wool sweaters during the winter in front of the student union of a remote college in upstate Minnesota. Because their sweaters are similar, they have developed the following tactics to increase their sales. Payoffs are (percentage of sales to George, percentage of sales to Henry). [The first number corresponds to George’s payoff and the second number corresponds to Henry’s payoff.]

(a) Does George have a dominant strategy?

(b) Does Henry have a dominant strategy?

(c) Solve for the pure strategy Nash equilibrium, if it exists.

Henry's Decision Shout Insults Post a Give Away Big Sign Free Balloons Shout Insults50,50 40,60 60,40 55,45 George's Post a DecisionBig Sign 50,50 45.55 Give Away Free Balloons 40,60 45,55 50,50

Explanation / Answer

a) Yes, for george shout insults is dominant strategy because for any choice of Henry George will always choose shout insults

b) Yes, for henry shout insult is dominant industry because for any choice of george henry will always choose shout insults.

c){ shout insult, shout insult }is only nash equilibirum because both players have shout insult as a dominant strategy.

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