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 own strategy unilaterally. If each player has chosen a strategy and no player can benefit by changing his or her strategy while the other players keep theirs unchanged, then the current set of strategy choices and the corresponding payoffs constitute a Nash equilibrium.
Stated simply, Amy and Phil are in Nash equilibrium if Amy is making the best decision she can, taking into account Phil's decision, and Phil is making the best decision he can, taking into account Amy's decision. Likewise, a group of players are in Nash equilibrium if each one is making the best decision that he or she can, taking into account the decisions of the others.
Read more about Nash Equilibrium: Applications, History, Stability, Occurrence, NE and Non-credible Threats, Computing Nash Equilibria
Famous quotes containing the words nash and/or equilibrium:
“One thing that literature would be greatly the better for
Would be a more restricted employment by authors of simile and
metaphor.”
—Ogden Nash (1902–1971)
“When a person hasn’t in him that which is higher and stronger than all external influences, it is enough for him to catch a good cold in order to lose his equilibrium and begin to see an owl in every bird, to hear a dog’s bark in every sound.”
—Anton Pavlovich Chekhov (1860–1904)