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Solutions: Game Theory – Nash Equilibrium – in a nutshell.

May 2, 2019
  1. In the ‘Live or Die’ scenario, there are two Nash equilibria (both drive on right side of the road or both drive on left side of the road) but no dominant strategy equilibrium. This is an example of the more general rule that not every Nash equilibrium is a dominant strategy. Every dominant strategy equilibrium is, however, a Nash equilibrium, as there is no incentive for the parties to deviate from the equilibrium in the case of a dominant strategy scenario (where the optimal strategy is defined regardless of what the other party does), such as the Prisoner’s dilemma.
  2. Steal-Steal is the dominant strategy equilibrium and also the Nash equilibrium.

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