Nash equilibrium and The Prisoner’s Dilemma
Nash equilibrium was a concept developed by John Forbes Nash who was awarded novel prize in economics in 1994 for his contribution in developing game theory. It is the concept in game theory that determines the optimal strategy in a non-cooperative game in which each player lacks any incentive to change his/her strategy. It conceptualizes the behavior and interactions between game participants to determine the best outcomes and also helps in predicting the decision of players if they are making decisions at the same time and the decision of player takes into account the decision of other players. Under Nash equilibrium, a player does not gain anything from deviating from the initial chosen strategy assuming that the other player keeps their decision intact. There may be Single or Multiple Nash equilibrium Single Nash equilibrium Imagine two competing companies: A and B. Both the companies want to determine whether they should launch a new advertising campaign for their products. ...