A situation in which economic actors interacting with one another each choose their best strategy, given the strategies the others have chosen is called a(n):
A)socially optimal solution
B)Nash equilibrium
C)competitive equilibrium
D)open market solution

Question

Quizplus · Accepted Answer

The scenario described is a classic example of a Nash equilibrium, named after Nobel laureate John Nash. In a Nash equilibrium, no player can increase their utility (i.e. financial benefit) by unilaterally changing their strategy, given the strategies of the other players. Therefore, each player's strategy is the best response to the other player's strategy, resulting in a stable outcome.

A Situation in Which Economic Actors Interacting with One Another