Nikita Build missile 8. Don\'t build missile Consider the payoff matrix to the r

Question

Nikita Build missile 8. Don't build missile Consider the payoff matrix to the right. If Nikita chooses "Don't build missile," what is Margaret's optimal strategy a. -10 b. -20 c. Build missile d. Don't build missile -10 -20 Build missile -10 Margaret 9. Consider the payoff matrix to the right. What is Nikita's dominant strategy? Don't a.-10 b. -20 c. Build missile d. Don't build missile issile0 10. Consider the payoff matrix to the right. What is the Nash equilibrium? a. 10, -10 b. 20, -20 c. Margaret chooses "Don't build missile": Nikita chooses "Don't build missile" d. Margaret chooses "Build missile": Nikita chooses "Build missile"

Explanation / Answer

a) when Nikita chose not the build missile the optimal strategy for Margaret is to build the missile, then the payoff will be 8 for Margaret and 0 for Nikita. The answer is "C", Build a missile.

b) Nikita's dominant strategy will be to build a missile. Starting from a position where none of them are building a missile, they will be getting 0 as a payoff but if they build it will increase to 8. So both of them will look to maximize their payoff and build a missile. The answer is "C", build a missile.  

c) Nash equilibrium will be "D", Nikita and Margaret both choose to build a missile.

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