The three images above are pay-off matrices for different famous games (battle o

Question

The three images above are pay-off matrices for different famous games (battle of the sexes, chicken or hawk dove, and prisoners dilemma). Select one of these pay-off matrices and formulate a real world scenario that would match the pay-offs. You may also use a different game/pay-off matrix if you wish; these are simply three games to get you started. Who wins? Who loses? Could they have achieved a better outcome? If you can, try to discuss the ideas of dominant strategy and Nash equilibrium

Explanation / Answer

chicken or hawk dove & prisoners dilemma depicts a real life situation. Where when a new firm is entering a market it has a choice either to exit out & earn nothing, or collude/cooperate and earn some amount or just declare war/competition and in the end may win completely or lose badly.

If a strictly dominant strategy exists for one player in a game, that player will play that strategy in each of the game's Nash equilibria. If both players have a strictly dominant strategy, the game has only one unique Nash equilibrium

Nash equilibrium is a concept of a non-cooperative game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only their own strategy.

In a real world if they form a cartel such a Mittals doing excellent work in UK, Back then Archelor was a UK no. 1 steel plant. When Mittal's Steel entered the market, they had a choice to compete, exit or form a cartel. Goverment was against the cartel, because UK govt will not be able to regulate the market. Ultimately, Mittal colluded/cooperated with Archelor and shared a market an in the end acquired & captured Archelor market as well.

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