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The payoff matrix shows the per-unit profits associated with the production strategies of two utility companies, UA and UB. Each firm has two choices: to reduce production by 10 percent or by 20 percent. The first entry in each cell indicates the profits to UA, and the second, the profits to UB. Assuming no cooperation, which statement is true?Neither company has a dominant strategy Both companies have an incentive to reduce production by 10%Both companies have an incentive to reduce production by 20%Only UA has an incentive to reduce production by 20%

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The payoff matrix below shows the per-unit profits associated with the production strategies of two utility companies. Both companies have an incentive to reduce production by 10%

Explain Payoff matrix

A payoff matrix is a table used in game theory where the tactics of one player are stated in rows and those of the other player in columns, with the cells displaying the rewards for each player with the row player's rewards mentioned first. A game's payoff is the incremental gain, benefit, or cost that a player experiences as a result of using their strategy in relation to the other player's plan. The game's context affects the payoff. For instance, businesses deciding on their advertising expenditures are concerned with their revenue, businesses making new investments in machinery and plant are curious to know their rate of return, and so on.

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