Economics Supply And Demand Questions
Nash equilibrium refers to a situation in game theory where each player's strategy is optimal given the strategies chosen by the other players. It is a stable outcome where no player has an incentive to unilaterally deviate from their chosen strategy.
On the other hand, Pareto efficiency refers to a state where it is impossible to make any individual better off without making someone else worse off. It represents an allocation of resources where no further improvements can be made without causing harm to at least one individual.
In summary, the main difference between Nash equilibrium and Pareto efficiency is that Nash equilibrium focuses on individual rationality and strategic decision-making, while Pareto efficiency focuses on overall societal welfare and the allocation of resources.