-Refer to the payoff matrix above. Which of the following is the dominant strategy equilibrium?
A)Set High Price/Set High Price
B)Set Low Price/Set Low Price
C)Set High Price/Set Low Price
D)Set Low Price/Set High Price

Question

-Refer to the payoff matrix above. Which of the following is the dominant strategy equilibrium?
A)Set High Price/Set High Price 
B)Set Low Price/Set Low Price 
C)Set High Price/Set Low Price 
D)Set Low Price/Set High Price

Quizplus · Accepted Answer

In a dominant strategy equilibrium, each player's strategy is the best response to the strategies chosen by the other players, regardless of what the other players do. In this case, setting a low price is the dominant strategy for both players because it yields the highest payoff regardless of the opponent's choice, leading to a low price/low price equilibrium.

-Refer to the Payoff Matrix Above