Suppose Manuel and Poornima are playing a game in which both must simultaneously choose the action Left or Right. The payoff matrix that follows shows the payoff each person will earn as a function of both of their choices. For example, the lower-right cell shows that if Manuel chooses Right and Poornima chooses Right, Manuel will receive a payoff of 3 and Poornima will receive a payoff of 7. Poornima
Left Right
Manuel Left 4,4 3,3
Right 5,4 4,3
The only dominant strategy in this game is for (Manuel/Poornima) to choose (left/right).
The outcome reflecting the unique Nash equilibrium in this game is as follows: Manuel chooses (left/right) and Poornima chooses (left/right).

/Poornima to choose right

Manuel to choose left

LEFT

right

Explanation:

Game theory looks at the interactions between participants in a competitive game and calculates the best choice for the player.

Dominant strategy is the best option for a player regardless of what the other player is playing.

Nash equilibrium is the best outcome for players where no player has an incentive to change their decisions.

If  Poornima chooses left, her payoffs are 4 or 3. If she chooses right they are 5 or 4

If  Manuel chooses left, her payoffs are 4 or 4. If she chooses right they are 3 or 3

It is Poornima that has a dominant strategy and it is to choose right because the payoffs of the right are greater than that of the left

For Manuel, the dominant strategy is to choose left

the Nash equilibrium is left for Manuel and right for Poornima

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.