Strictly dominant strategy

Definition

A strictly dominant strategy is an action that results in a better outcome for a player, regardless of what the other players do. This means that when a player has a strictly dominant strategy, they will always prefer that strategy over any other, no matter the choices made by others. Recognizing strictly dominant strategies can simplify decision-making processes, leading to clearer predictions about player behavior in strategic situations and providing insights into the existence of equilibria.

5 Must Know Facts For Your Next Test

1. A strictly dominant strategy ensures that a player will always choose it over any other available strategies due to its guaranteed superior outcomes.
2. In games with strictly dominant strategies, players can often predict outcomes more easily since they will choose their dominant strategy without considering opponents' choices.
3. Not all games have strictly dominant strategies; sometimes players must rely on other strategic concepts like Nash equilibrium.
4. Strictly dominant strategies can lead to game simplification, allowing analysts to focus on fewer potential outcomes when predicting behavior.
5. Identifying strictly dominant strategies can help determine if a game has a unique solution, making it easier to analyze and understand the dynamics of the game.

Review Questions

• How does the presence of a strictly dominant strategy affect a player's decision-making in strategic scenarios?
  • When a player has a strictly dominant strategy, it simplifies their decision-making because they can confidently choose that strategy without worrying about the actions of others. This is because the strictly dominant strategy always leads to a better outcome compared to alternatives. Consequently, players will gravitate toward these strategies, which can influence overall game dynamics and predictability.
• Discuss how strictly dominant strategies relate to Nash equilibrium in strategic games.
  • Strictly dominant strategies play an essential role in reaching Nash equilibrium. If one or more players have strictly dominant strategies, those strategies will be part of the Nash equilibrium since no player will have an incentive to change their chosen strategy after observing others. This relationship highlights how strictly dominant strategies can lead to stable outcomes where players remain satisfied with their choices.
• Evaluate the implications of strictly dominant strategies on the overall complexity and predictability of strategic interactions in games.
  • The existence of strictly dominant strategies significantly reduces complexity in strategic interactions by providing clear paths for players' decisions. When such strategies are present, predicting players' choices becomes more straightforward since they will consistently opt for their best-performing actions. This clarity not only simplifies analysis but also enhances our understanding of strategic behavior, allowing economists and theorists to focus on essential elements of decision-making without getting lost in more complicated considerations.

Related terms

Dominant strategy: A strategy that is optimal for a player, regardless of the strategies chosen by other players, including both strictly and weakly dominant strategies.

Nash equilibrium: A situation in which each player's strategy is optimal given the strategies chosen by all other players, meaning no player has an incentive to unilaterally change their strategy.

Weakly dominant strategy: A strategy that yields a payoff at least as good as any other strategy for every possible choice of the opponents, and strictly better for at least one choice.