Table 17-19

question 6

Multiple Choice

Table 17-19.The Chicken Game is named for a contest in which drivers test their courage by driving straight at each other.John and Paul have a common interest to avoid crashing into each other,but they also have a personal,competing interest to not turn first to demonstrate their courage to those observing the contest.The payoff table for this situation is provided below.The payoffs are shown as (John,Paul) .

-Refer to Table 17-19.What is John's dominant strategy?

• A) John has no dominant strategy.
• B) John should always choose Turn.
• C) John should always choose Drive Straight.
• D) John has two dominant strategies.

---

Definitions:

Relative Economic Conditions

Economic circumstances in one region or country as compared to another.

Long-Run Exposure

A type of currency risk faced by firms that operate internationally over an extended period.

Exchange Rate Risk

The potential for financial loss due to fluctuations in the exchange rate between two currencies.

Cross-Rate

An exchange rate between two currencies derived from their respective relations with a third currency.