In the context of game theory and oligopoly profit, what is the term for a player's best choice, if it exists, regardless of their opponent's strategy?

• A. Collusive agreement
• B. Nash equilibrium
• C. Pareto optimal outcome
• D. Dominant strategy

Answer: (D)

Verified step by step guidance

1. Understand the concept of a player's strategy in game theory, which is a plan of action chosen to maximize their payoff given the possible actions of other players.
2. Recognize that a 'dominant strategy' is defined as a strategy that yields a higher payoff for a player regardless of what the other players do.
3. Contrast this with other terms: a 'Nash equilibrium' is a set of strategies where no player can benefit by unilaterally changing their own strategy; a 'collusive agreement' involves players cooperating to increase joint profits; and a 'Pareto optimal outcome' is an allocation where no player can be made better off without making another worse off.
4. Identify that the question asks for the term describing a player's best choice regardless of the opponent's strategy, which matches the definition of a 'dominant strategy'.
5. Summarize that the dominant strategy is the best response independent of others' actions, making it a key concept in predicting behavior in oligopoly and game theory contexts.