A situation in which each firm chooses the best strategy given the strategies chosen by other firms is called a

Question

Quizplus · Accepted Answer

A Nash equilibrium is a situation in which each firm chooses the best strategy given the strategies chosen by other firms. It represents a stable outcome where no player has an incentive to change their strategy unilaterally. Therefore, it is considered the best choice for firms to maximize their payoff in a strategic interaction. The other options, such as dominant strategy and collusion, are not always applicable or feasible in every situation. A payoff matrix is a tool used to represent the outcomes of different strategies, but it does not offer a solution on its own.

A Situation in Which Each Firm Chooses the Best Strategy