Question

In 200 words or less explain the concept of the dominant strategy equilibrium using examples and evidence.

Answer 1

Dominant Strategy- It is a strategy which is better than other strategies. Dominant strategy equilibrium occurs at time when each player chooses their own dominant strategy. In case of Prisoner dilemma, the dominant strategy is to confess. ,even the equilibrium is not pareto efficient equilibrium. . Dominant strategy equilibrium is always nash equilibrium.

A good example of elimination of dominated strategy is the analysis of the Battle of the

	North	South
North	2,-2	2,-2
South	1,-1	3,-3

Bismarck Sea. In this game, as depicted in the adjacent game matrix, Kenney has no dominant strategy (the sum of the payoffs of the first strategy equals the sum of the second strategy), but the Japanese do have a weakly dominating strategy, which is to go North (the payoffs are equal for one strategy but strictly better for the other). Since only one of them has a dominant strategy, there is no dominant strategy equilibrium. We must then proceed by eliminating dominated strategies. As we’ve already mentioned, for the Japanese strategy ‘go North’ weakly dominates strategy ‘go South’. Therefore, we eliminate the strategy ‘go South’ for the Japanese, who will go North. Now that we only consider the Japanese going North, Kenney’s strategy ‘go North’ is strictly dominant over strategy ‘go South’, which will be eliminated. Therefore, North-North is the weak-dominance equilibrium.