Question

g Ron and Dena own the only two profit maximizing sandwich shops in town. Both Ron and Dena are trying to decide whether or not they should advertise in the local newspaper. The following payoff matrix gives their profits under each possible outcome. Over what range of values would X need to be in order for "Don’t Advertise" to be a dominant strategy for Ron in this game? Over what range of values would Y need to be in order for "Don’t Advertise" to be a dominant strategy for Dena in this game

Answer 1

Remainder part of Question:

                                                Dena

                                 Advertising       Don't Advertise

Ron     Advertising   ($X, $400)         ($300, $425)

    Don't Advertise ($400, $100)         ($350, $Y)

Answer:

Part A. Don't Advertise" is a dominant strategy only for Ron if the value of X is below $400.

Part B. "Don't advertise" is a dominant strategy only for Dena if the value of Y is below $100.

Explanation:

If Dena is desiring to opt to "Advertising", then Ron will only have more pay off in choosing "Don't advertise" if the X is below $400.

On the other hand, if Dena is desiring to opt "Don't Advertise", then Ron will only have more pay off in choosing "Don't advertise" if again X is below $400.

This means that the "Don't Advertise" is a dominant strategy only for Ron if the value of X is below $400.

Similarly, if Ron desires to opt "Advertising", then Dena will only have more pay off in choosing "Don't advertise" if the value of Y is below $100.

On the other hand, if Ron is desiring to opt "Don't Advertise", then Dena  will only have more pay off in choosing "Don't advertise" if the value of Y is below $100.

This means that the "Don't advertise" is a dominant strategy only for Dena if the value of Y is below $100.