Nash Equilibrium

Discipline: Economics

Named after mathematician JOHN NASH, and central to game theory, Nash equilibrium refers to a situation in which individuals participating in a game pursue the best possible strategy while possessing the knowledge of the strategies of other players.

It works on the premise that the player cannot improve his/her position given the other players' strategy.

Nash equilibrium is sometimes referred to as the non-co-operative equilibrium because each player chooses his/her own strategy believing it is the best one possible, without collusion, and without thinking about the interests of either his opponent or the society in which he/she lives.

Source:
J F Nash, 'Equilibrium Points in n-Person Games', Proceedings of the National Academy of Science, USA, vol. XXXVI (1950), 48-49

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