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Game Theory and Backward Induction
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In a zero-sum extensive form game, if Player A has a strategy that guarantees them a win regardless of Player B's actions, what can be inferred about the strategies employed by both players?

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Learning Path

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Choose AnswerChoose the Best Answer

A

Player A's strategy is dominant and Player B has no optimal response.

B

Player B can still win with a different strategy.

C

Both players have equally optimal strategies.

D

The outcome is uncertain regardless of Player A's strategy.

Understanding the Answer

Let's break down why this is correct

Player A’s plan works no matter what Player B does. Other options are incorrect because Some think B could still win by changing tactics; It is easy to think both players can do the best.

Key Concepts

extensive form games
zero-sum games
Topic

Game Theory and Backward Induction

Difficulty

medium level question

Cognitive Level

understand

Deep Dive: Game Theory and Backward Induction

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Definition
Definition

Game theory is a mathematical framework used to analyze strategic interactions among rational decision-makers. Backward induction is a method used to solve sequential move games, where players make decisions based on the observed actions of others, as illustrated by the game tree format. This concept is significant in business as it helps understand competitive behavior and decision-making processes in various strategic situations.

Topic Definition

Game theory is a mathematical framework used to analyze strategic interactions among rational decision-makers. Backward induction is a method used to solve sequential move games, where players make decisions based on the observed actions of others, as illustrated by the game tree format. This concept is significant in business as it helps understand competitive behavior and decision-making processes in various strategic situations.

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