What is Nash equilibrium?
A) the outcome that results when each player chooses the best strategy given the strategies of the other player
B) the outcome that results when each player chooses their dominant strategy regardless of the strategies of the other player
C) the outcome that results when players use tit-for-tat- strategies
D) the outcome that results when players collude on strategies

Question

Quizplus · Accepted Answer

Nash equilibrium is the outcome where each player's strategy is the best response given the strategies of the other players. In other words, no player can improve their outcome by unilaterally changing their strategy. Option B is incorrect because a dominant strategy may not always lead to a Nash equilibrium. Option C refers to a specific strategy and not necessarily a Nash equilibrium. Option D is incorrect as collusion involves coordination between players and is not a Nash equilibrium.

What Is Nash Equilibrium