Game Theory Dominant Strategy Practice: Econ Concepts in 60 Seconds

The video tutorial introduces key economic concepts through game theory, focusing on identifying dominant strategies in payoff matrices. It provides exercises for viewers to practice finding dominant strategies for different firms. The instructor explains the solutions, highlighting the decision-making process for firms A, B, X, and Y, and concludes with an analysis of price strategies.

What is the primary focus when analyzing the payoff matrix for firms A and B?

• The products they are selling

• The dominant strategies of the firms

• The advertising budget of the firms

• The market share of the firms

If firm B advertises, what should firm A do to maximize its payoff?

• Not advertise and get 60

• Advertise and get 100

• Advertise and get 90

• Not advertise and get 75

Does firm B have a dominant strategy?

• No, they do not have a dominant strategy

• Yes, they should never advertise

• Yes, they should always advertise

• Yes, they should follow firm A's actions

What is firm X's dominant strategy in the given matrix?

• Advertise more

• Lower prices

• Maintain prices

• Increase production

What should firm Y do if firm X decides to maintain prices?

• Maintain prices

• Increase prices

• Stop advertising

• Lower prices