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16.2: Nash Equilibrium
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- What is an equilibrium to a game?
- In a Nash equilibrium, each player chooses the strategy that maximizes his or her expected payoff, given the strategies employed by others. Outcomes that aren’t Nash equilibria involve mistakes for at least one player.
- The game called “the battle of the sexes” has two Nash equilibria.
- In the game of matching pennies, none of the four possibilities represents a Nash equilibrium. Consequently, players need to randomize. Random strategies are known as mixed strategies because the players mix across various actions.