Answer to Question #82162 in Macroeconomics for Dheeraj Joshi

Question

Expalin in simple words Nash equilibrium

Answer 1

In terms of game theory, if each player has chosen a strategy, and no player can benefit by changing strategies while the other players keep theirs unchanged, then the current set of strategy choices and the corresponding payoffs constitutes a Nash equilibrium.

Stated simply, Alice and Bob are in Nash equilibrium if Alice is making the best decision she can, taking into account Bob's decision while Bob's decision remains unchanged, and Bob is making the best decision he can, taking into account Alice's decision while Alice's decision remains unchanged.

Source:

https://en.m.wikipedia.org/wiki/Nash_equilibrium