Asked by Jessica Green on Jun 10, 2024

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​In a sequential game,given Mattie's best response function,what would Irene's best response be?

A) ​Not enter the market
B) Enter the market
C) Fight
D) ​Run away

Best Response

A strategy in game theory where a player chooses the option that gives them the highest payoff, given other players' strategies.

Sequential Game

A strategic game where players make moves one after another rather than simultaneously.

Monopolized

A market structure dominated by one supplier, with no close substitutes for the product or service, giving the supplier significant control over prices and output.

  • Analyze the effects of participating in sequential and simultaneous games.
  • Deduce the superior strategies within the framework of game theory.
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Verified Answer

BS
Bikramvir SinghJun 15, 2024
Final Answer :
B
Explanation :
Based on the given scenario, if Irene decides not to enter the market, she would earn zero profits. If Irene enters the market, Mattie has two possible options, either to accommodate Irene and share profits equally or fight a price war. If Mattie accommodates Irene, each would earn a profit of 5 million (half of the 10 million profits). If Mattie fights, both would earn a loss of 5 million each. However, if Irene enters the market, and Mattie's best response function predicts that the most rational option would be to accommodate Irene, then Irene's best response would be to enter the market as well. Therefore, given Mattie's best response function, the best choice for Irene would be to enter the market (option B).