By definition,a Nash equilibrium in a duopoly is the situation in which each player:
A) plays a dominant strategy.
B) plays the best strategy given the other's strategies.
C) gets the highest possible payoff.
D) gets the highest payoff possible without lowering the opponent's payoff.
E) is happy with the outcome.

Question

Quizplus · Accepted Answer

In a Nash equilibrium, each player plays the best strategy given the other's strategies, meaning neither player can improve their payoff by unilaterally changing their strategy. While playing a dominant strategy can lead to a Nash equilibrium, it is not a requirement. Similarly, getting the highest possible payoff and being happy with the outcome are related to a Nash equilibrium but not necessarily the defining characteristics. Finally, option D is incorrect as a Nash equilibrium does not necessarily require players to avoid lowering the opponent's payoff, it only requires them to play the best strategy given the other's choices.

By Definition,a Nash Equilibrium in a Duopoly Is the Situation