Dominant Strategy

Updated Dec 30, 2022

Definition of Dominant Strategy

In game theory, a dominant strategy is a strategy that is the best choice for a player, regardless of the other players’ strategies. That means it is the most profitable option for this player, no matter what the other players do.

Example

To illustrate this, let’s look at a game of rock-paper-scissors. In this game, each player chooses one of three options: rock, paper, or scissors. If both players choose the same option, the game is a draw. Otherwise, the player who chooses the stronger option wins. In this case, rock beats scissors, scissors beats paper, and paper beats rock.

In this game, there is no dominant strategy. However, if there was a version of the game where rock beat paper,  the dominant strategy would be to always choose rock. This is because no matter what the other player chooses, rock could never lose. That means it is the most profitable option for the player, regardless of the other player’s strategy.

Why Dominant Strategy Matters

Dominant strategies are important for understanding decision-making in various situations. For example, in business, companies often have to make decisions that involve multiple players. In such cases, it is crucial to identify possible dominant strategies in order to make the most profitable decision. Similarly, in politics, understanding the dominant strategy can help politicians make better decisions that benefit their constituents.