Nash equilibrium is represented by a set of moves in a game that ________.
A)improves the firms' payoffs by changing the choice
B)sustains an incentive to defect by changing the choice
C)minimizes each firm's input based on the number of rivals
D)maximizes each firm's payoff given the choices of rivals

Question

Quizplus · Accepted Answer

Nash equilibrium is a concept in game theory where each player makes the best decision for themselves based on the decisions of the other players. In this case, the Nash equilibrium represents the set of moves in the game that maximizes each firm's payoff given the choices of rivals, which is option D. Option A may be true for some scenarios, but it doesn't necessarily apply to all cases. Option B is incorrect because Nash equilibrium is supposed to sustain cooperation, not defection. Option C doesn't make sense in the context of Nash equilibrium because it is not based on input or the number of rivals.

Nash Equilibrium Is Represented by a Set of Moves in a Game