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• Prisoner's Dilemma. Two suspects in a crime are held in separate cells. ...
• Battle of the Sexes: Cricket or Movie. Two people (a boy and his girlfriend for example) wish to go out together.The boy prefers to go for the cricket match whilst ...
• Matching Pennies

• The determination of the optimal solution becomes difficult with the increase in the number of participants.
• It is more of a logical strategy and not a winning strategy.
• The concept fails to account for uncertainties that are encountered in real-life business situations.

• Choose one opponent’s choice and see if the player has an incentive to change their choice.
• If no,circle that payoff,if yes; check another cell within the same choice by the opponent.
• Repeat for all choices for both players.
• The Nash equilibrium (could be more than 1) occur where both payoffs are circled.

Choose which player whose payoff you want to calculate. Multiply each probability in each cell by his or her payoff in that cell. Sum these numbers together. This is the expected payoff in the mixed strategy Nash equilibrium for that player.

Examples of Nash equilibrium in some games

• Prisoner's Dilemma. Two suspects in a crime are held in separate cells. ...
• Battle of the Sexes: Cricket or Movie. Two people (a boy and his girlfriend for example) wish to go out together.The boy prefers to go for the cricket match whilst ...
• Matching Pennies

Disadvantages

• The determination of the optimal solution becomes difficult with the increase in the number of participants.
• It is more of a logical strategy and not a winning strategy.
• The concept fails to account for uncertainties that are encountered in real-life business situations.

Summary (rule of thumb method):

• Choose one opponent’s choice and see if the player has an incentive to change their choice.
• If no, circle that payoff, if yes; check another cell within the same choice by the opponent.
• Repeat for all choices for both players.
• The Nash equilibrium (could be more than 1) occur where both payoffs are circled.

• A Nash equilibrium is a situation in which, given the actions taken by the other players involved in the competition, no player is better off by changing his or her own action. In economics, the applications of a Nash equilibrium include the setting of prices between competing companies.

• Freebase(0.00 / 0 votes)Rate this definition: Nash equilibrium. In game theory, the Nash equilibrium is a solution concept of a non-cooperative game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only his own strategy unilaterally.