# Solving for Dominant Strategies and the Nash EquilibriumSuppose Carlos and Deborah 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 Carlos chooses Right and Deborah chooses Right, Carlos will receive a payoff of 5 and Deborah will receive a payoff of 1.## Payoff Matrix- A matrix is presented with Carlos's choices on the rows and Deborah's choices on the columns. | | Deborah: Left | Deborah: Right | |--------------|---------------|----------------| | **Carlos: Left** | 4, 4 | 6, 7 | | **Carlos: Right** | 2, 4 | 5, 1 |- **Numbers in each cell**: The first number is Carlos's payoff, and the second number is Deborah's payoff.## Analysis- **Dominant Strategy**: Determine the strategy where a player's choice always results in better payoffs, regardless of the opponent's choice.- **Nash Equilibrium**: Identify the outcome where neither player has an incentive to change their choice given the opponent's choice.### Questions:1. The only dominant strategy in this game is for _______ to choose _______.2. The outcome reflecting the unique Nash equilibrium in this game is as follows: Carlos chooses _______ and Deborah chooses _______.

Dominant strategy is the strategy that yields the maximum payoff and this will not affected when…

Suppose Carlos and Deborah 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 Carlos chooses Right and Deborah chooses Right, Carlos will receive a payoff of 5 and Deborah will receive a payoff of 1. Carlos Deborah Left Left 4,4 Right 2,4 Right 6,7 5,1 The only dominant strategy in this game is for to choose The outcome reflecting the unique Nash equilibrium in this game is as follows: Carlos chooses and Deborah chooses

Suppose Carlos and Deborah 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 Carlos chooses Right and Deborah chooses Right, Carlos will receive a payoff of 5 and Deborah will receive a payoff of 1. Carlos Deborah Left Left 4,4 Right 2,4 Right 6,7 5,1 The only dominant strategy in this game is for to choose The outcome reflecting the unique Nash equilibrium in this game is as follows: Carlos chooses and Deborah chooses

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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