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Now suppose Firm 1 knew that Firm 2 were going to play strategy S2? Firm 1 could either play S1 and earn a payoff of 6 or play S2 and earn a payoff of 7. As a profit maximizer Firm 1 would choose to play S2 in this situation and earn a payoff of 7
It turnes out that Firm 1 will want to choose strategy S2 whether Firm 2 plays S1 or S2. In other words, S2 is the best strategy for Firm 1, no matter what Firm 2 does. This is our definition of a dominant strategy, a strategy that is best whatever the other player does.
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