Defined by John F. Nash Jr. (Equilibrium Points in N-Person Games, 1950).
Finds the outcomes where no player can do better by changing course alone, predicting where competing choices will settle even when everyone would prefer another result.
When to reach for it
When several parties' choices interact, as in pricing, negotiation, or market entry, and the question is where things will stabilize.
How it runs
- Name the players whose choices interact.
- List each player's available strategies.
- Estimate each player's payoff for every combination.
- Find the combinations where no one gains by switching alone.
- Compare those with outcomes that are better for everyone.
- Change payoffs, information, or commitments to shift the equilibrium.
Where it sits in SOLVE eX
Go to the source
- Equilibrium Points in N-Person Games, Proceedings of the National Academy of Sciences, 1950