A Nash equilibrium can be defined as the outcome that:
A)results in equal payoffs to both players.
B)is unique and invariant to the strategy chosen by the other.
C)maximizes the sum of the players' payoffs.
D)results when both players lose by deviating from the equilibrium play.
E)maximizes each player's payoff against the strategy chosen by the other.

Question

Quizplus · Accepted Answer

A Nash equilibrium is a situation in which each player's strategy is the best response to the other player's strategy. In other words, no player can improve their payoff by unilaterally changing their strategy. The most common way to identify a Nash equilibrium is to look for a situation in which each player is maximizing their payoff given the strategy chosen by the other player. Therefore, the correct answer is E, which states that a Nash equilibrium maximizes each player's payoff against the strategy chosen by the other.

A Nash Equilibrium Can Be Defined as the Outcome That