Based on the game theory table for Natasha and Marla, who has a dominant strategy: Natasha or Marla?
Natasha has a dominant strategy, while Marla does not. Natasha's dominant strategy is to set a high price for her manicures, as it yields the highest payoff for her, regardless of Marla's strategy. The correct answer is c. Natasha, but not Marla.
Explanation:
Natasha has a dominant strategy based on the game theory table provided. A dominant strategy is a strategy that yields the highest payoff regardless of the strategy chosen by the other player. In this case, Natasha's dominant strategy is to set a high price for her manicures.
If Marla sets a high price, Natasha earns $4,000 in profit, which is higher than the $2,800 she would earn if Marla sets a low price. If Marla sets a low price, Natasha still earns $4,500 in profit, which is higher than the $500 she would earn if Marla sets a high price.
On the other hand, Marla does not have a dominant strategy. Her profits depend on Natasha's strategy. If Natasha sets a high price, Marla earns $700 in profit, while if Natasha sets a low price, Marla earns $3,500 in profit.
Therefore, Natasha has a dominant strategy in this game, while Marla's strategy is dependent on Natasha's decision.