The Nash Equilibrium Theory

Categories: Game Theory
About this essay

Over view about this theory: 

It’s a theory which was invented or discovered by an American Economist named John Nash in 1928. This theory is a game between players every player has a strategy about a particular situation and this game have some rules: –

  1. Every player has values called Payoffs. And this game has 3 probability’s (win, lose, draw)
  2.  Every player has some strategy which specifies the path of the game and resolve the decision and in this game the small pay off value can be able to change the path of the game 360 degree.

He was an American Economist born in 1928 and was died in recent years in 2015. He is a mathematical was winning a Nobel prize in his career in 1994. He was joined to a chemical engineering. He transfers to chemistry then mathematics and got the bachelor’s and master’s degrees in 1948. And he makes a doctorate when he reaches 22 age. Despite his struggle with the disease which called Schizophrenia this not make him stop from what he does and not give up easily and continue in his achievements until he reaches to this theory which have effective in our world until this moment.

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But in 23 may 2015 The world is witnessing sad news in the history of the scientific nation ‘john Nash was died ‘john Nash was died in the 82 age and his wife in a car accident in New jersey in an taxi car , a police state tell that this accident is because of the driver is missing his control of the car.

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As we know this theory became from the most important topic which be learned in schools and university because we are in the time which this theory will used a lot in it.

This theory has a big history, and it do a big difference in world between people in take decision in situation we need to reach a decision give the members of situation a decision which his result give a win to the all sides of the game, not only one win.

We need to talk about the thinking of the people in all through history and all the times. First we want to talk about how people thinking in their situation and how they handle with it and how they take their decisions and how in past they think and how they solve their arguments between them and is this way is efficient and give all right results or there is an theories give them ways better than the traditional way to solve their problems ?

In reality we should believe that the ways of thinking and ways for take a decision is developed through the time and give our better results.

How people in past take their decisions before this theory is invented:

In past the people are thinking in the traditional way and solve their arguments in sessions by take the opinion of people and discuses until they reach to solve to the problem. this is because they not have a more efficient technics in this time until discover the Nash equilibrium theory by Nash. this theory made a big difference in the problem solving and taking good decision in a lot of situation. we have a good example whish explain this theory.

This example called prisoner dilemma , this example tell us that we have two prisoners ,the police catch them and put everyone in a room for investigations with him .if prison A confess and B silent ,A will be free and B will take 10 years and vice versa , but if A and B confess ,everyone will take 5 years and if everyone being silent ,everyone will take one year, so in this situation the best solution is the last one ,this is called what Nash s theory tell in simplicity .

And this theory used in a lot of situation and there is a lot of situations in current time. For example in real life we used this game theory if we are in some situation and have a many probabilities and every decision in this situation will be effective in the others if this decision is achieved and managers used it when they should take a decision in some work between them .so they have two ways to solve this problem between them , cooperative or competitive styles ,but if the best solution is when they became competitive because the another style will give them lose result so they should go to apply this theory to get the right decision whish make all sides of arguments happy and reach to win – win result .so this theory is very important and make a big difference in the world and make our decision better.

Note that not all situation we can apply Nash s theory in it and maybe we can get multiple Nash in some situation. Now we will discuss in Briefly what is Nash theory tell and in what situation it used, but we want to know the history of this theory and how it became from one of the most important inventors in the world.

Nash s theory is invented in 1950 by a mathematician called Nash, this theory is his PHD. He made it when he is a student have 22 years old. He made a more popular film about this theory called ‘A beautiful mind’ this film wins Oscar`s is prize 4 times in 2001 His theory made a big difference in a national economy. the standards of economy prove that this theory is most important in economy and this theory is the embodiment of the idea that economic agents are rational, that they simultaneously act according to their incentives.

We all know that Nash is not expert in economy but he is a mathematician inventor but he invented away based on mathematics give us the dominate strategy but not always this decision being the best response. Maybe you found another one be the best response.

Now we use this theory in a lot of situations like when we are in a company and have multiple strategy and need to reach to solution give our win – win result.

This theory is not used only in economics, but it used in life economic field it can use to determine the prices and how prices control of the markets and it used to determine the wages of the workspace economists to understand and predict the outcomes from social interactions to understand and predict the outcomes from social interactions. Another application of this theory is competition between apple and google, it’s based on big complex game in this theory or competition between countries like USA and Russia .so you should know that it’s not only used economics but also in military strategy. The Nash Equilibrium used in all types of conflict, whether it may be personal conflict with our friends, conflict between corporations or even international conflict.

So, as we can see its most important inventers that service the world and make our decision more accuracy and help use in all fields but in economic business in specific.

Effective of this theory in the future:

In the future we maybe saw the robotics use this theory. Because robotics need to work in teams to do their works in efficient way without wrong result .so they could use this theory because of each robot in the teem of robots is effective in other robotics so we need to get a mechanism to make them take their decisions independently because game theory will give them the coordination mechanism ,so I expect that this theory in the next years will be used in all non-comparative situations.

Finally, I want to conclusion my paper by telling my opinion in this theory. this theory will be becoming from the basis of our life when taking noncomparative decision, in the future we will saw a lot of applications in all fields of life based on this theory, in specially in economics business by transferring our deacons into mathematical way to help to reach to suitable decision.

Cite this page

The Nash Equilibrium Theory. (2019, Nov 24). Retrieved from

The Nash Equilibrium Theory
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