📚 Learning Guide
Dominant Strategies in Game Theory
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In a game where two players have the option to either cooperate or betray, which of the following statements best illustrates the concept of strategic dominance over risk dominance?

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Choose the Best Answer

A

Player A will always choose to betray if Player B is known to cooperate.

B

Both players benefit more from cooperating than betraying each other.

C

Player A's strategy of betraying is considered risk dominant if it leads to a higher payoff regardless of Player B's choice.

D

Player B should always choose to cooperate to minimize their losses.

Understanding the Answer

Let's break down why this is correct

Answer

In game theory, strategic dominance occurs when one player's choice is better than another's, no matter what the other player does. For example, if Player A can choose to cooperate or betray, and betraying always gives A a higher payoff regardless of Player B's choice, then betraying is strategically dominant. On the other hand, risk dominance looks at which option is safer or less risky for both players. If both players would benefit more from cooperating, but one player is afraid the other might betray, then cooperation can be seen as risk-dominant. In this situation, the best illustration of strategic dominance is when betraying is always the better choice for Player A, regardless of Player B's decision.

Detailed Explanation

Player A's choice to betray is risk dominant. Other options are incorrect because This suggests Player A will always betray, but it doesn't show the best strategy; This implies cooperation is always better, but it ignores that betrayal can sometimes lead to higher payoffs.

Key Concepts

strategic dominance
risk dominance
Topic

Dominant Strategies in Game Theory

Difficulty

medium level question

Cognitive Level

understand

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