Nash equilibrium

Páginas: 2 (455 palabras) Publicado: 26 de septiembre de 2010
Nash Equilibrium Concept
Since the last century, the Nash game theory has become the dominant model in economic theory and has made important contributions to political, educational andpsychological sciences. Game theory is the study of strategic behavior when two or more individuals interact, and each bases his/her decisions on what he (or she) expects others to do. One way to approach theanalysis of a situation of interaction between individuals, it is the theory of no cooperative games, in which, basically, there is a set of competitors, each with strategies available. Individuals maketheir decisions independently of each other but knowing the opponents and possible strategies that they have at their disposal. In other words, individuals try to predict how the other competitorswill act and choose the most beneficial strategy to their own convenience. In this structure, competitors do not reach any level of cooperation among them.
A prime example to explain thenon-cooperative games is the prisoner's dilemma. The story of this game is that, two individuals are arrested because they committed a specific crime; both are separated in different cells and interrogatedindividually. Both have two choices: cooperate with each other (non-admit) or not cooperate (confess to the crime). Prisoners know that if neither confesses, each will go to prison for two years. But if oneof them confesses and the other not, then the one who confesses will be released and the other one who did not confess will be in prison for 10 years. If both confess, both will be imprisoned for sixyears.
The conclusion in situations similar to this, which are common in everyday life, is that selfish competition can lead to states that are inferior in terms of personal and social benefit to thestates cooperative, but the latter can not be implemented at unless there are external reinforcements, such as contracts signed by law, verification, etc., obliging the parties to comply with the...
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