Nash Equilibrium

Nash Equilibrium

Nash equilibrium is a concept within game theory where the optimal outcome of a game is where there is no incentive to deviate from their initial strategy. The Nash Equilibrium, named after US mathematician John Nash, is a phenomenon in game theory whereby players, seeking optimal outcomes vis-à-vis the potential responses of others in the game, conclude that they will not achieve a better solution by changing their strategy, on the assumption that the other players in the game have also opted not to change their strategies. In a business setting, business competitors independently taking the same course of action from a range of options that leads to a better outcome (but not necessarily the best outcomes) than taking a course of action that could lead to the worst payoff, given a set of identifiable payoffs, have reached the Nash Equilibrium.

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