A Nash equilibrium is defined as
A) making zero economic profit in the long run.
B) forming a cartel with strong penalties for cheaters.
C) relying on other game players to realize the benefit of cooperation.
D) each player taking the best possible action given the action of the other player.
E) each player taking the action that is best for all the players.

Question

Quizplus · Accepted Answer

A Nash equilibrium occurs when each player takes the best possible action given the action of the other player. In other words, no player has an incentive to change their own strategy, because doing so would not improve their overall outcome. This is a stable outcome, because any deviation from the equilibrium would result in a worse outcome for at least one player.

A Nash Equilibrium Is Defined as