Suppose that both players in a non-cooperative, one-time, static game have a strictly dominant strategy. The strategy profile for this game is a:
I. Nash equilibrium.
II. Strictly-dominant-strategy equilibrium.
III. Market equilibrium.
Which of the following is correct?
A) I only.
B) II only.
C) III only.
D) I and II only.
E) I and III only.

Question

Quizplus · Accepted Answer

When both players in a non-cooperative, one-time, static game have a strictly dominant strategy, the outcome is both a Nash equilibrium, because no player has an incentive to deviate unilaterally, and a strictly-dominant-strategy equilibrium, by definition. It does not necessarily imply a market equilibrium, which is a broader concept often used in economics to describe a state where supply equals demand.

Suppose That Both Players in a Non-Cooperative, One-Time, Static Game