Economics Supply And Demand Questions
The difference between dominant strategy and Nash equilibrium lies in their concepts and applications in game theory.
A dominant strategy refers to a strategy that yields the highest payoff for a player, regardless of the strategies chosen by other players. In other words, it is the best strategy for a player regardless of the actions taken by others. A player will always choose their dominant strategy, as it ensures the highest possible outcome for them.
On the other hand, Nash equilibrium is a concept that occurs when each player in a game chooses their best strategy, given the strategies chosen by the other players. It is a situation where no player has an incentive to unilaterally deviate from their chosen strategy, as doing so would not improve their outcome. In Nash equilibrium, all players are simultaneously optimizing their strategies, resulting in a stable outcome.
In summary, the main difference is that dominant strategy focuses on the best strategy for an individual player, while Nash equilibrium considers the best strategies for all players in a game.