A game's outcome is a Nash equilibrium when
A) any attempt to improve one player's payoff will lower the other player's payoff.
B) neither player wants to change his strategy,given the strategy chosen by the other player.
C) the total payoff to the players is as large as possible.
D) the first player has selected his strategy taking the second player's optimal response into account.

Question

Quizplus · Accepted Answer

In a Nash equilibrium, neither player has an incentive to change their strategy given the strategy chosen by the other player. This means that both players are "satisfied" with their choice and there is no benefit to changing. Option A is not correct because sometimes both players can benefit from changing their strategy (a non-zero sum game). Option C is not necessarily true since the total payoff could be higher in a different equilibrium. Option D is describing the concept of backward induction, which is different from the definition of a Nash equilibrium.

A Game's Outcome Is a Nash Equilibrium When