📚 Learning Guide
Game Theory and Backward Induction
hard

In a game involving two players, Player A has a dominant strategy to choose Action X, while Player B has a mixed strategy involving a probability of playing Action Y. If the payoff matrix indicates that Action X guarantees a payoff of 10 for Player A regardless of Player B's choice, what can be concluded about Player B's optimal strategy?

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Choose the Best Answer

A

Player B should always play Action Y

B

Player B's best response can vary based on the chosen probability

C

Player B should never play Action Y

D

Player B will always achieve a higher payoff by choosing Action Y

Understanding the Answer

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Answer

Because Player A’s dominant action X guarantees a payoff of 10 no matter what Player B does, Player B’s choice cannot improve Player A’s payoff. Player B therefore only cares about its own payoff against A’s inevitable X. Thus B’s optimal strategy is to play whichever action gives B the highest payoff when facing X—if one action dominates, B will play that pure action; if B is indifferent, any mix is fine. For example, if B earns 5 when playing Y against X but 7 when playing Z, B’s best reply is to play Z with probability 1.

Detailed Explanation

Because Player A always gets 10 no matter what, Player B's payoff depends only on B's own choices. Other options are incorrect because Thinking that B must always play Y ignores that B's payoff can be higher with other actions; Believing B should never play Y assumes Y is bad, but Y might give B a good payoff when A plays X.

Key Concepts

dominant strategy
mixed strategies
game payoff
Topic

Game Theory and Backward Induction

Difficulty

hard level question

Cognitive Level

understand

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