📚 Learning Guide
Nash Equilibrium in Game Theory
hard

In a two-player game, Player 1 has two strategies: A and B, while Player 2 also has two strategies: C and D. If Player 1's dominant strategy is A, and Player 2's best response to A is C, what can we infer about the Nash Equilibrium in this game?

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Learning Path
Learning Path

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Choose the Best Answer

A

The Nash Equilibrium is (A, C)

B

The Nash Equilibrium is (B, D)

C

There is no Nash Equilibrium

D

The Nash Equilibrium is (B, C)

Understanding the Answer

Let's break down why this is correct

Answer

In this game, since Player 1 has a dominant strategy of A, it means that Player 1 will always choose A because it provides a better outcome regardless of what Player 2 does. Player 2's best response to Player 1 choosing A is strategy C, which means that when Player 1 plays A, Player 2 will choose C for the best result. This situation leads us to a Nash Equilibrium at the strategy pair (A, C), where neither player has an incentive to change their strategy. In other words, Player 1 is sticking with A because it is the best choice, and Player 2 is sticking with C because it is the best response to A. For example, if Player 1's payoff with A and Player 2's payoff with C are both maximized at this point, they will both stay with these strategies.

Detailed Explanation

In this game, Player 1 will always choose A because it's their best option. Other options are incorrect because This option suggests that Player 1 would choose B, but A is their best choice; This option implies that players can't find a stable choice.

Key Concepts

Nash Equilibrium
dominant strategy
iterative elimination of dominated strategies
Topic

Nash Equilibrium in Game Theory

Difficulty

hard level question

Cognitive Level

understand

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