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Chapter 6: The Centre of Gravity: The Nash Equilibrium
The Centre of Gravity: The Nash Equilibrium
Once an interactive situation has been modelled as a game, we must find an equilibrium, or a stationary point to which the game gravitates. The most widely used criteria for stationarity used in game theory is the Nash equilibrium. This concept is elaborated here, setting the stage for examining one of the most widely discussed games of all times—the prisoners’ dilemma.
In 1949, halting his studies in pure mathematics, John Nash turned his mind to the nascent field of game theory. The brilliant Hungarian computer scientist John von Neumann and the economist Oskar Morgenstern had published their magnum opus Theory of Games and Economic Behavior in 1944.5 They had found a way ...