Question

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.

Answer 1

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.