Table 17-13
Two home-improvement stores (Lopes and HomeMax) in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their store and parking lot to accommodate potential growth in their customer base. The following game depicts the strategic outcomes that result from the game. Increases in annual profits of the two home-improvement stores are shown in the table below.
-Refer to Table 17-13. Pursuing its own best interest, Lopes will
A)increase the size of its store and parking lot only if HomeMax also increases the size of its store and parking lot.
B)increase the size of its store and parking lot only if HomeMax does not increase the size of its store and parking lot.
C)increase the size of its store and parking lot regardless of the decision made by HomeMax.
D)not increase the size of its store and parking lot regardless of the decision made by HomeMax.

Question

Table 17-13
Two home-improvement stores (Lopes and HomeMax) in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their store and parking lot to accommodate potential growth in their customer base. The following game depicts the strategic outcomes that result from the game. Increases in annual profits of the two home-improvement stores are shown in the table below. 
-Refer to Table 17-13. Pursuing its own best interest, Lopes will
A)increase the size of its store and parking lot only if HomeMax also increases the size of its store and parking lot. 
B)increase the size of its store and parking lot only if HomeMax does not increase the size of its store and parking lot. 
C)increase the size of its store and parking lot regardless of the decision made by HomeMax. 
D)not increase the size of its store and parking lot regardless of the decision made by HomeMax.

Quizplus · Accepted Answer

Lopes will increase the size of its store and parking lot regardless of HomeMax's decision because it is pursuing its own best interest, likely due to a dominant strategy in a game theory context.

Table 17-13 Two Home-Improvement Stores (Lopes and HomeMax) in a Growing Urban