Nash Equilibrium

Anyone know what this is? It relates to the prisoners dilemma

It is prisoner dilemma… and it’s an ‘optional’ read under the oligopoly section

In Nash equilibrium, each player must answer negatively to the question: “Knowing the strategies of the other players, and treating the strategies of the other players as set in stone, can I benefit by changing my strategy?”

Well that “optional” topic popped up in the Mock. Thanks mam. So the market is in equilibrium if each player cannot benefit from changing strategies?

The sample mock? Not for me

For me it did too. Market players want to change strategy and make more profit, but they won’t.

i love game theory. the movie a beautiful mind only touches on it, though.

the main thing to remember is that in an oligopoly, collusion (like raising prices) will lead to profit maximization. however, if one party cheats (by keeping prices low), he can steal the business away from the higher priced parties and maximize his profits. since no one wants to get screwed, they both will keep prices low. this is a big factor in the kinked curve where competitors will match a price decrease, but not an increase.