What is a Nash Equilibrium?

A Nash equilibrium is a common solution concept used in game theory for non-cooperative (i.e. players cannot work together or communicate), 2+ player games where given all other players' strategy choices, each player can do no better by changing his own strategy. 

Suppose there are two players, A and B, that can choose to play either strategy X or strategy Y.  Player A and Player B both playing strategy X (i.e. A,B: {X,X}) is a Nash Equilibrium if and only if neither player can increase her payoff by deviating to playing Y holding constant the other player's strategy at X.  Note, there can be multiple Nash Equilibria in a game.

RC

Related Economics A Level answers

All answers ▸

Should the fizzy drinks market be regulated or left to the free workings of the market?


How can I effectively use graphs in my essay?


1) Evaluate potential strategies that could be adopted by an economy that is heavily dependent on primary products to aid development (25 marks)


With over 12.7 million mobile phone contracts being offered in the UK, is it possible for a consumer to make a rational decision when selecting a mobile phone tariff?