Author Question: What is a dominant strategy equilibrium? What will be an ideal ... (Read 90 times)

silviawilliams41 · **on:** Jun 29, 2018

What is a dominant strategy equilibrium?

What will be an ideal response?

Question 2

Because ________ in the government budget deficit increase the real interest rate, budget deficits can ________ firm investment.

A) decreases; increase B) increases; decrease
C) decreases; decrease D) increases; increase

Sweetkitty24130 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

When a player has the same best response to every possible strategy of the other players, then we say that the player has a dominant strategy. A combination of strategies is a dominant strategy equilibrium if each strategy is a dominant strategy.

Answer to Question 2

B