Managerial Economics 12th Edition by Mark Hirschey

Exercise 1

Game Theory Concepts. Recognize each of the following statements as being true or false and explain why.
A. A set of strategies constitutes a Nash equilibrium if no player can improve their position given the strategies chosen by other players.
B. A secure strategy is very conservative and should only be considered if the rival's optimal strategy is identical.
C. A dominant strategy is also a secure strategy, but every secure strategy is not necessarily a dominant strategy.
D. In a one-shot game, the Nash equilibrium is also the best outcome that can be achieved under collusion.
E. If a player has no dominant strategy, it pays to look at the game from the rival's perspective and anticipate the rival choosing its dominant strategy.