Saturday, July 25, 2015

Nash equilibrium: something on which economists agree

The IGM Forum asks a panel of economists whether they agree or disagree with a given statement. The following statement drew a lot of agreement:

Nash Equilibrium

"Behavior in many complex and seemingly intractable strategic settings can be understood more clearly by working out what each party in the game will choose to do if they realize that the other parties will be solving the same problem. This insight has helped us understand behavior as diverse as military conflicts, price setting by competing firms and penalty kicking in soccer."