Refer to the following payoff matrix:
Suppose the production game depicted in the payoff matrix is a sequential-move game. Identify the strategy leading to a first-mover advantage for player 1.
A) Player 1 moves first and plays High Q. Observing player 1's move, player 2's best response is to play Low Q.
B) Player 1 moves first and plays Low Q. Observing player 1's move, player 2's best response is to play Low Q.
C) Player 1 moves first and plays High Q. Observing player 1's move, player 2's best response is to play High Q.
D) Player 1 moves first and plays Low Q. Observing player 1's move, player 2's best response is to play High Q.

Question

Refer to the following payoff matrix: 
Suppose the production game depicted in the payoff matrix is a sequential-move game. Identify the strategy leading to a first-mover advantage for player 1.
A) Player 1 moves first and plays High Q. Observing player 1's move, player 2's best response is to play Low Q. 
B) Player 1 moves first and plays Low Q. Observing player 1's move, player 2's best response is to play Low Q. 
C) Player 1 moves first and plays High Q. Observing player 1's move, player 2's best response is to play High Q. 
D) Player 1 moves first and plays Low Q. Observing player 1's move, player 2's best response is to play High Q.

Quizplus · Accepted Answer

If player 1 moves first and plays High Q, player 2's best response is to play Low Q, which gives player 1 a payoff of 6. However, if player 1 moves first and plays Low Q, player 2's best response is to play High Q, which gives player 1 a payoff of -1. Therefore, strategy A leads to a first-mover advantage for player 1.

Refer to the Following Payoff Matrix