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Nash equilibrium (view source)

Revision as of 21:36, September 3, 2009

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The '''Nash equilibrium''' is the set of decisions by multiple rivals when they maximize their individual self interests in a like-minded manner.
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The '''Nash equilibrium''' is the set of decisions by multiple rivals when they maximize their individual self interests in a like-minded manner.  The solution is different from when someone maximizes his self-interest in the hope that similarly situated participants act different.  The Nash equilibrium assumes that all similarly situated participants act in a similar manner.
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The "equilibrium" occurs when no participant would gain anything by only changing his own decision when the other identically situated participants made the same decision. A problem can have more than one Nash equilibrium.
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The "equilibrium" is the set of decisions such no individual participant, acting alone, can gain anything my altering his decision.  If were able to improve his position, then he would, thereby disqualifying that set of decisions as the "equilibrium".  This is similar to a chemical equilibrium or a steady-state solution in physics, whereby each individual maximizes his own gain based on similar actions by similiarly situated participants.
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A problem can have more than one Nash equilibrium.
    
The Nash equilibrium is named after John Nash, a mathematician.  It is a topic in [[game theory]], and its significance was recognized by award of the [[Nobel Prize]] in Economics.
 
The Nash equilibrium is named after John Nash, a mathematician.  It is a topic in [[game theory]], and its significance was recognized by award of the [[Nobel Prize]] in Economics.
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