Question 1

What is a Nash Equilibrium?

Accepted Answer

A state in a game where no player can improve their outcome by unilaterally changing their strategy.

Question 2

In a Nash Equilibrium, why does no player have an incentive to change their strategy?

Accepted Answer

Because each player's strategy is the best response to the strategies chosen by other players.

Question 3

True or False: A Nash Equilibrium always results in the best possible outcome for all players.

Accepted Answer

False. Nash equilibrium is stable but not necessarily optimal or fair for all players.

Question 4

Define a 'Pure Strategy Nash Equilibrium.'

Accepted Answer

An equilibrium where each player chooses a specific strategy, with no randomization, that no one would benefit from deviating from.

Question 5

What is a 'Mixed Strategy Nash Equilibrium'?

Accepted Answer

An equilibrium where players randomize over different strategies, usually when no pure strategy equilibrium exists.

Question 6

What does it mean when a strategy is a 'Best Response'?

Accepted Answer

It is the strategy that maximizes a player's payoff, given the strategies chosen by other players.

Question 7

In which type of games is a Mixed Strategy Nash Equilibrium common?

Accepted Answer

In games where there is no Pure Strategy Nash Equilibrium, such as Rock-Paper-Scissors.

Question 8

Fill in the blank: Nash Equilibrium is a ______ state in a game.

Accepted Answer

stable

Question 9

Fill in the blank: In Nash Equilibrium, all players’ strategies are ______ best responses to each other.

Accepted Answer

mutual

Question 10

What is the Prisoner's Dilemma example of?

Accepted Answer

A game theory scenario where Nash Equilibrium leads to a suboptimal outcome for both players if they act in self-interest.

Question 11

Explain why the Prisoner's Dilemma leads to a suboptimal Nash Equilibrium.

Accepted Answer

Because both players choose to 'confess' as their best response, resulting in worse outcomes for both than if they both stayed silent.

Question 12

In economic terms, where is Nash Equilibrium applied?

Accepted Answer

In market competition, pricing, and auctions.

Question 13

What concept in game theory illustrates strategic interactions and decision-making?

Accepted Answer

Game theory.

Question 14

Define 'Pareto Optimality' in game theory terms.

Accepted Answer

A state where no player can improve their outcome without worsening the outcome for another.

Question 15

What is an example of a zero-sum game?

Accepted Answer

Rock-Paper-Scissors, where one player's gain is another's loss.

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Game Theory - Nash Equilibrium Flashcards