Economics • Economic BasicsMedium
In game theory, what defines a 'Nash Equilibrium'?
A. A situation where all players choose the exact same strategy
B. A set of strategies where no player has an incentive to unilaterally change their chosen strategy given the choices of others✓ Correct Answer
C. An outcome that maximizes the total collective payoff for all participating players
D. A condition where payoffs for all players are equalized
💡 Solution & Explanation
A Nash Equilibrium represents a stable state in game theory where no individual player can benefit by unilaterally changing their chosen strategy, assuming all other players keep theirs constant. It does not necessarily imply that all players choose identical strategies or that the collective payoff is maximized.
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