(Table) Referring to the payoff matrix for Natasha and Marla (which shows Natasha's profits in plain text and Marla's profits in italic), who has a dominant strategy?
$\begin{array}{c}
\quad \quad \quad \quad \quad \quad \quad \text { Marla's Manicures } \
\begin{array}{|l|l|ll|ll|}
\hline & & {\text { High Price }} & &{\text { Price }} \
\hline \text { Natasha's Nail Salon } & \text { High Price } & \$ 4,000 & \$ 4,500 & \$ 700 & \$ 3,500 \
\hline &\text { Low Price } & \$ 2,800 & \$ 500 & \$ 3,000 & \$ 3,700 \
\hline
\end{array}\end{array}$
A) both Natasha and Marla
B) neither Natasha nor Marla
C) Natasha, but not Marla
D) Marla, but not Natasha

Question

(Table) Referring to the payoff matrix for Natasha and Marla (which shows Natasha's profits in plain text and Marla's profits in italic), who has a dominant strategy?
$\begin{array}{c}
 \quad  \quad  \quad  \quad  \quad  \quad  \quad \text { Marla's Manicures } \
\begin{array}{|l|l|ll|ll|}
\hline & & {\text { High Price }} & &{\text { Price }} \
\hline \text { Natasha's Nail Salon } & \text { High Price } & \$ 4,000 & \$ 4,500 & \$ 700 & \$ 3,500 \
\hline  &\text { Low Price } & \$ 2,800 & \$ 500 & \$ 3,000 & \$ 3,700 \
\hline
\end{array}\end{array}$
A) both Natasha and Marla
B) neither Natasha nor Marla
C) Natasha, but not Marla
D) Marla, but not Natasha

Quizplus · Accepted Answer

Neither Natasha nor Marila has a dominant strategy. For both players, the best response depends on the other's action. For Natasha, if Marla chooses High Price, Natasha's best response is High Price ($4,000 > $2,800). If Marla chooses Low Price, Natasha's best response is Low Price ($3,000 > $700). For Marla, if Natasha chooses High Price, Marla's best response is High Price ($4,500 > $3,500). If Natasha chooses Low Price, Marla's best response is Low Price ($3,700 > $500).

(Table) Referring to the Payoff Matrix for Natasha and Marla