Economic 101: Dominant Strategy | SterlingTerrell.net

Economic 101: Dominant Strategy

 What is a dominant strategy?

In game theory, a Dominant Strategy is a strategy that is best - regardless of the decisions made by others.

An example?

Look at another instance of prisoners' dilemma.

Cain and Able are caught and interrogated for a crime.

They both have the option to confess, or be quiet.

Here are their options:

                                                   Able Confesses                            Able Remains Quiet

Cain Confesses                         Able gets 10 years                        Able gets 25 years
                                                  Cain gets 10 years                         Cain goes free

Cain Remains Quiet                  Able goes free                              Able gets 2 years
                                                   Cain gets 25 years                        Cain gets 2 years

Here, confessing is the dominant strategy.

10 years in prison is better than 25 years - and being let go is better than 2 years.