The Basics
- Simple definition: A strategy that yields the best payoff for a player regardless of what other players do.
- Core idea: No matter what others choose, this choice is always best for you.
- Think of it as: The no-brainer – whatever happens, you’re better off with this move.
What It Actually Means
When a player has a dominant strategy, decision-making becomes simple: choose it, irrespective of others’ actions. Not all games have dominant strategies – often the best move depends on what others do. In the prisoner’s dilemma, betraying is dominant – always better whether the other betrays or stays silent. Dominant strategies lead to predictable outcomes but may produce inefficient results.
Example
In the cement pricing game, if cutting price always gives higher profit regardless of whether the rival cuts or not, then cutting is a dominant strategy. Both have it, so both cut – equilibrium.
Why It Matters
Dominant strategies simplify analysis and strongly predict behavior. When they exist, outcomes are clear. Their absence creates strategic complexity needing equilibrium analysis.
See also
Game Theory • Nash Equilibrium • Prisoner’s Dilemma • Strategic Dominance • Rational Choice
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