Two competing coffee shops, A and B, are deciding whether to run a promotional advertisement this month. If both advertise, they each increase sales by 20%. If one advertises while the other does not, the advertiser boosts sales by 30% while the other sees no increase. What is the dominant strategy for both shops based on game theory principles?

In this situation, each coffee shop is trying to decide whether to advertise or not, knowing that their decision affects the other shop's sales. If both shops choose to advertise, they will each see a 20% increase in sales, which is good but not the best outcome. If one shop advertises while the other does not, the one that advertises will get a 30% increase, while the other will not gain anything. The dominant strategy for both shops is to advertise because, regardless of what the other shop does, advertising always leads to a better or equal outcome compared to not advertising. For example, if shop A chooses to advertise and shop B does not, shop A benefits more than if both choose not to advertise, making advertising the safer bet for both.