Teaching with Economics Experiments >> Teaching Modules >> Game Theory - Normal Form Games with Dominant Pure Strategies >>
Should Cisco spend more on research and development?
In some games, there is no dominant strategy for all players, but you can still predict a likely outcome.
Cisco's dominant strategy is to raise its R&D spending. Juniper Networks, however, does not have a dominant strategy. But since Juniper Networks can predict that Cisco's will follow its dominant strategy, Juniper Networks' best move is to leave its own ad spending the same. (In games like these, remember that we assume that both firms know the payoff matrix - they know the players, the strategies available and the payoffs for each player.)