Dominated Strategy

Definition

A dominated strategy is a choice in a strategic game that results in a lower payoff than another strategy, regardless of what the other players choose. This means that a player can improve their outcome by switching to a different strategy, making the dominated strategy less appealing. In the context of static and dynamic games, recognizing dominated strategies can simplify decision-making processes and help players focus on more effective strategies.

5 Must Know Facts For Your Next Test

1. In games with dominated strategies, rational players will never choose these strategies since better options are available.
2. Dominated strategies can be eliminated from consideration, leading to a simpler analysis of potential outcomes in strategic games.
3. The identification of dominated strategies is crucial in both static games, where players make decisions simultaneously, and dynamic games, where decisions unfold over time.
4. A player might face multiple dominated strategies, but only one needs to be identified for it to be removed from consideration.
5. Understanding dominated strategies helps players refine their strategies and make more informed decisions based on the actions of others.

Review Questions

• How does recognizing dominated strategies impact decision-making in static versus dynamic games?
  • Recognizing dominated strategies simplifies decision-making in both static and dynamic games. In static games, players can eliminate dominated strategies before making their choices, which reduces the complexity of potential outcomes. In dynamic games, understanding which strategies are dominated helps players adjust their plans over time as they observe the actions of others, ultimately leading to more optimal decisions.
• Compare and contrast strictly dominated strategies with weakly dominated strategies within strategic games.
  • Strictly dominated strategies are those that always result in a lower payoff than another strategy, no matter what other players do. In contrast, weakly dominated strategies may yield an equal payoff against one or more opponents' actions while being better against others. Understanding this distinction allows players to determine not just which strategies are less favorable but also when they might still be viable options under certain circumstances.
• Evaluate the role of dominated strategies in determining Nash Equilibria within various strategic scenarios.
  • Dominated strategies play a significant role in identifying Nash Equilibria by allowing players to focus on potentially optimal strategies. When players eliminate dominated strategies, they can narrow down their choices and identify stable outcomes where no player has an incentive to deviate. By analyzing these remaining strategies within the framework of Nash Equilibrium, players can better understand the strategic landscape and make informed decisions that lead to mutually beneficial outcomes.

Related terms

Nash Equilibrium:

A situation in a game where no player can benefit by changing their strategy while the other players keep theirs unchanged.

Strictly Dominated Strategy: A strategy that is always worse than another strategy for a player, regardless of what the other players do.

Mixed Strategy: A strategy where a player randomizes over possible moves to keep opponents uncertain about their next action.