1. What is meant by a \'purely dominant strategy\' in game theory? a) A strategy
ID: 2428626 • Letter: 1
Question
1. What is meant by a 'purely dominant strategy' in game theory?
a) A strategy that is sure to lead to a 'dominant' market share.
b) A strategy that is certain to win.
c) A strategy that gives one firm price leadership over another.
d) A strategy that has a higher payoff than the alternatives regardless of the actions of a competitor.
2. If you are in an oligopolistic market with one other competitor, is it to your advantage if your opponent has a purely dominant strategy?
a) No, because your opponent is going to dominate the market.
b) Yes, because you know what your opponent is going to do.
c) Yes, because it means you have the same dominant strategy.
d) No, because your opponent will become the price leader.
Explanation / Answer
a) A purely dominant strategy is a strategy where the player has a higher payoff than the alternatives regardless of the action of a competitor. The answer is "D".
b) "B"
DOminant strategy means the opponent will take that course of action no matter what the other player does. It makes them predictable.
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