Economics • Economic BasicsMedium
In game theory, what is a 'Dominant Strategy'?
A. A strategy that yields the highest payoff for a player regardless of the strategies chosen by other players✓ Correct Answer
B. A strategy that is chosen only when all other players cooperate fully
C. A choice that results in zero economic profit for all competing firms
D. An optimal policy implemented exclusively by a central monetary authority
💡 Solution & Explanation
A dominant strategy in game theory guarantees the highest payoff for a participant irrespective of the actions chosen by any other player. This concept helps economists predict predictable outcomes in competitive markets without assuming coordination or communication between rivals.
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