The payoff matrices in Figure 2 at the top of the next column show the payoffs for two games. The payoffs are given in parentheses. The values on the left refer to the payoff to A; the values on the right refer to the payoff to B. Hence, (2, 25) means a $2 payoff to A and a $25 payoff to B.

a. Is there a dominant strategy in each game for each player?

b. If game one were repeated a large number of times and you were A and you could change your strategy, what might you do?

c. Which strategy would you play in game two? Why?

Data from Figure 2

Transcribed Image Text:

Game 1: Pricing Firm A Price high Ann (A) Price low Game 2: Chicken Swerve Do not swerve FIGURE 2 Price high (15, 15) (25,2) Swerve (5,5) Firm B (10,3) Bob (B) Price low (2,25) (5,5) Do not swerve (3, 10) (-10,-10)