Nash Equilibrium
A nash equilibrium for a game is a set of actions from which no agent can unilaterally profitably deviate (Osborne & Rubinstein, 1994, p. 14).
This recording is also available on stream (no ads; search enabled). Or you can view just the slides (no audio or video). You should not watch the recording this year, it’s all happening live (advice).
If the video isn’t working you could also watch it on youtube. Or you can view just the slides (no audio or video). You should not watch the recording this year, it’s all happening live (advice).
If the slides are not working, or you prefer them full screen, please try this link.
Notes
Game theory is supposed to explain why things happen:
‘Many events and outcomes prompt us to ask: Why did that happen? [...] For example, cutthroat competition in business is the result of the rivals being trapped in a prisoners’ dilemma’ (Dixit, Skeath, & Reiley, 2014, p. 36).
This section introduces two notions that are involved in giving such explanations, dominance and Nash equilibrium.
If you understand these notions and can apply them, you can do game theory.
Nash Equilibrium
A Nash equilibrium for a game is a set of actions (sometimes called a ‘strategy’) from which no agent can unilaterally profitably deviate.
Why equilibrium?:
‘equilibrium [...] simply means that each player is using the strategy that is the best response to the strategies of the other players’ (Dixit et al., 2014, pp. 32--3)
Although not covered in this section, there is some interesting research on other ways of specifying a ‘best response’ (Misyak & Chater, 2014; Misyak & Chater, 2014). Why might you want to do so? Potential motives arise in Applications and Limits of Game Theory and What Is Team Reasoning?.
Ask a Question
Your question will normally be answered in the question session of the next lecture.
More information about asking questions.