Which of the following is true for a Nash equilibrium of a two-player game?
A) The joint payoffs of the two players are highest compared to other strategy pairs.
B) Given another player's strategy stipulated in that Nash equilibrium, a player cannot improve his welfare by changing his strategy.
C) A Nash equilibrium is always unique in real-world problems.
D) Given another player's strategy stipulated in that Nash equilibrium, a player cannot improve his welfare by changing his strategy, and a Nash equilibrium is always unique in real-world problems.

Question

Quizplus · Accepted Answer

A Nash equilibrium is a concept in game theory where each player's strategy is optimal given the other players' strategies. It means that no player can benefit by changing their strategy while the other players keep theirs unchanged. This does not necessarily imply that the joint payoffs are highest (A is incorrect), nor does it imply that a Nash equilibrium is always unique (C and D are incorrect, as D combines both B's correct statement with C's incorrect statement about uniqueness).

Which of the Following Is True for a Nash Equilibrium