Today we’re diving into a concept that transformed not only economics, but also political science, business negotiations, and military planning.
It’s called the Nash Equilibrium, and it explains why — in many strategic situations — people don’t necessarily choose the best overall outcome… but instead settle on a stable one, even if it’s suboptimal.
Let’s get smarter.
What Is a Nash Equilibrium?
A Nash Equilibrium occurs when each player in a game chooses their best strategy given what everyone else is doing — and no one has anything to gain by changing their own choice alone.
In simpler terms: once everyone has chosen their strategy, no one wants to move — because moving makes them worse off unless others move too.
It’s a state of mutual best responses — a kind of strategic ceasefire.
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