Chapter 65, Problem 5MCQ

To determine

To choose: Based on the payoff matrix, the true option.

Answer to Problem 5MCQ

Correct option is C i.e., Both Person R and Person J have a dominant strategy.

Explanation of Solution

As per the payoff matrix given, Person J will confess whether or not Person R confesses if Person J confesses, he will get a 2-year sentence when Person R doesn’t confess, Person R will get a 20-year sentence. So, here the benefit of confessing is more than that of not confessing.

In case Person J does not confess and Person R also does not confess both will get an equal sentence of 5year.

In case Person R confesses and Person J does not confess: Person J gets a 20-year sentence and Person R gets only 2 years sentence.

Finally, if both of them confess: both will get an equal sentence of 15 years.

So, considering all the above scenarios both Person J and Person R have a dominant strategy.

Economics Concept Introduction

Introduction:

Dominant strategy: As per the game theory, A dominant strategy is regarded as the optimal action for an individual irrespective of the way other players have acted.

A Nash equilibrium defines the optimal state of the game when both players take optimal actions but now take into consideration the actions of their opponent.