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17 June, 05:19

Which of the following best describes a Nash equilibrium? An outcome from which one or both competitors can improve their position by adopting an alternative strategy. The unstable outcome of a repeated game. An outcome that is stable only because of credible threats. An outcome that both competitors see as optimal, given the strategy of their rival.

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  1. 17 June, 07:27
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    The question is reconstructed below:

    Which of the following best describes a Nash equilibrium?

    A. An outcome from which one or both competitors can improve their position by adopting an alternative strategy.

    B. The unstable outcome of a repeated game.

    C. An outcome that is stable only because of credible threats.

    D. An outcome which both competitors see as optimal, given the strategy of their rival.

    Answer:

    D. An outcome which both competitors see as optimal, given the strategy of their rival.

    Explanation:

    Although Nash equilibrium is a game theory, it has been widely applied in economics. It states that a competitor can achieve his desired outcome by sticking to his original strategy. Both competitors' strategies are optimal when considering the decisions of each other.
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