Nash equilibrium

In game theory, the Nash equilibrium is a solution concept of a non-cooperative game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only his or her own strategy.

Description

If each player has chosen a strategy and no player can benefit by changing strategies while the other players keep theirs unchanged, then the current set of strategy choices and the corresponding payoffs constitutes a Nash equilibrium.

The reality of the Nash equilibrium of a game can be tested using experimental economics methods.

Stated simply, Amy and Will are in Nash equilibrium if Amy is making the best decision she can, taking into account Will's decision while Will's decision remains unchanged, and Will is making the best decision he can, taking into account Amy's decision while Amy's decision remains unchanged.

Likewise, a group of players are in Nash equilibrium if each one is making the best decision possible, taking into account the decisions of the others in the game as long as the other party's decision remains unchanged.

See also

• Adjusted winner procedure
• Complementarity theory
• Conflict resolution research
• Cooperation
• Equilibrium selection
• Extended Mathematical Programming for Equilibrium Problems
• Evolutionarily stable strategy
• Game theory
• Glossary of game theory
• Hotelling's law
• Mexican standoff
• Minimax theorem
• Mutual assured destruction
• Non-cooperative game
• Optimum contract and par contract
• Relations between equilibrium concepts
• Self-confirming equilibrium
• Solution concept
• Stackelberg competition
• Wardrop's principle

External links

• Nash equilibrium @ Wikipedia