Question

In a two-player game, player 1 can choose either M or N as strategies. Player 2 can choose either X, Y, or Z as strategies. The payoff matrix is as follows:

a	X	Y	Z
M	3, 1	0, 0	−1, 2
N	0, 0	1, 3	0.5, 1

Which set of strategy profiles survives iterated elimination of strictly dominated strategies?

• A. (N, Y)
• B. (M, X)
• C. (N, Z)
• D. (M, Z)

Answer 1

The Correct Option is A

Iterated Elimination of Strictly Dominated Strategies 

Step 1: Evaluating Player 2's Strategies

• Player 2’s strategy X is strictly dominated by Z when Player 1 chooses N because 0.5 > 0.
• Similarly, Player 2’s strategy Z is strictly dominated by Y when Player 1 chooses N since 3 > 1.

Step 2: Determining Player 2's Best Response

• Given Player 1 chooses N, Player 2’s optimal response is Y.

Step 3: Finding Player 1's Best Response

• Since Player 2’s optimal choice is Y, Player 1's best response is N.

Final Surviving Strategy Profile:

(N, Y)