The equilibrium in a market in which no participant has an incentive to change his or her strategy unilaterally is called a:
A) market equilibrium.
B) Nash equilibrium.
C) coordinating equilibrium.
D) financial equilibrium.

Question

Quizplus · Accepted Answer

The equilibrium described in the question is known as a Nash equilibrium, named after John Nash who developed the concept. This equilibrium occurs when no player in a game (or participant in a market) has an incentive to change their strategy unilaterally, meaning that each participant is taking the best possible action given the strategies of all other participants. A Nash equilibrium is considered a stable solution as it is unlikely to be destabilized by one participant's change in strategy.

The Equilibrium in a Market in Which No Participant Has