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Social Science Clinic => Economics => Microeconomics => Topic started by: scienceeasy on May 24, 2019

Title: What is a Nash equilibrium? Is this equilibrium the best outcome for the players? Give an example.
Post by: scienceeasy on May 24, 2019

What is a Nash equilibrium? Is this equilibrium the best outcome for the players? Give an example.

Title: What is a Nash equilibrium? Is this equilibrium the best outcome for the players? Give an example.
Post by: 1_Step_At_ATime on May 24, 2019

John Nash proposed the concept of an equilibrium in a game where each player takes the best possible action given the action of other players. A Nash equilibrium is not necessarily the best one for the players. This can be seen in the prisoners' dilemma. Typically the prisoners' dilemma is a game where two prisoners are given rules and payoffs to encourage them to confess to a crime. The prisoners, acting in their own self-interest, confess to the crime to minimize their jail time and so confession is the Nash equilibrium. But if the players can communicate with each other, they can improve their position. If they can communicate, they both deny the crime and so both wind up doing less time in jail.

Title: What is a Nash equilibrium? Is this equilibrium the best outcome for the players? Give an example.
Post by: scienceeasy on May 24, 2019

Thanks

Title: What is a Nash equilibrium? Is this equilibrium the best outcome for the players? Give an example.
Post by: 1_Step_At_ATime on May 24, 2019

Welcome :)