When a firm maximizes the expected payoff of possible strategies

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    it takes into account that not all game players are predictable and so it develops its strategy assuming the rival player pursues the option with the highest assigned probability.
     it takes into account that not all game players are rational and so is developed by assuming the rival firm will pursue the least profitable strategy.
     probabilities are assigned to each of the rival firms possible strategies and an expected value is calculated based on outcomes given the payoff matrix. The strategy with the highest value expected outcome is pursued..
     it takes into account that not all game players are rational and so maximizes profits by pursuing the least risky strategy.
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

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probabilities are assigned to each of the rival firms possible strategies and an expected value is calculated based on outcomes given the payoff matrix. The strategy with the highest value expected outcome is pursued..
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)

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