Question

In the context of game theory, what does a Nash equilibrium imply?

• A. All players achieve the highest possible payoff
• B. Each player's strategy is optimal given the strategies of the other players
• C. One player dominates and controls the outcome
• D. The game reaches a point where no players are rational

Answer 1

Answer:

B. Each player's strategy is optimal given the strategies of the other players

A Nash equilibrium occurs when each player's strategy is optimal, assuming the other players' strategies remain unchanged, and no player has an incentive to change their strategy unilaterally.