The Concept Of Nash Equilibrium Is Fine In Theory, But Next To Useless In Practice.

812 words - 4 pages

1. Introduction
The theory of Nash equilibrium by John Nash (1951) has been a central concept in game theories and further more for a wide range from economics even to the social and environmental sciences studies. Besides the game theory, David (2012) has recalled that, there are three unrealistic traits of standard economic model of human behavior – “unbounded rationality, unbounded willpower, and unbounded selfishness – all of which behavioral economics modifies.” However, consider the assumption of Nash equilibrium theory, there is a hypothesis about all players in the game they are rational and understand the rule of the game. Which means they do know about their opponents choices and what reaction they are going to choose with the goal of profit maximization (or their own objectively goal). In the following there will be a further discussion and line out the practicality of Nash equilibrium.


2. Model and Discussion
Nash equilibrium is the set of result with none of the players have incentive to change their strategies (either pure or mixed) with their profit maximization (or own objectively goal).(Martin,2009;Michael et al.,2013)By using the very famous non-zero-sum game example in game theory, prisoner’s dilemma, it is the easiest way for us to understand the basic means of Nash equilibrium. The police caught two thefts and now they are referencing. Once it gives out a payoff matrix of the thefts (Fig 1.) and result in how many months they are in jail, as the theft is telling the truth (Cooperate) or lying (Defect), first payoff will be player 1’s and the second following will represent as player 2’s. (James et al., 1993)

Fig 1. The Prisoner’s Dilemma
‘Rational Cooperation in the Finitely Repeated Prisoner's Dilemma: Experimental Evidence ‘(James et al., 1993:p.572).

In brief words, the best payoff for them individually will be choosing to lie to the police as we seen. However, they don’t know which choices each other is going to choose, so they will try to maximize their own benefit. For player 1, no matter the choice of player 2 react, 7<12 and 0<4, which he will “cooperate” as his dominated strategy rather than “defect”. Which player 2 will give it’s a same result.
However, prisoner’s dilemma is the only game with strategy will last Nash equilibrium till a long term in reality.
Consider another more realistic example, the assurance game of Russia and US...

Find Another Essay On The concept of Nash equilibrium is fine in theory, but next to useless in practice.

Equilibrium in the Market Essay

1353 words - 5 pages willingness to withhold some demand for a certain product. Of course, the basics of supply and demand retrospectively control the equilibrium in the market. Supply and demand is one of the most simple-looking aspects of an economy and its study, but yet it presents the greatest challenge to analysts. Although most events can be mathematically calculated to perfection, the human aspect always intervenes and throws off a calculation. Dealing with the

Peplau’s Theory of Interpersonal Relations Applied in the Nursing Practice

679 words - 3 pages Theories exist in all types of professions. A theory was created to get a better grasp or understanding of a phenomenon (Potter, Perry, Stockert, & Hall, 2013). A nursing theory uses this idea to clarify and develop an aspect of nursing (Potter et al., 2013). There are many different nursing theories that help nurses understand the nursing practice. The theory that lays down the foundation for nursing is Hildegard Peplau’s theory of

Applying the Theory of Comfort in Nursing Practice

1438 words - 6 pages Nursing practice can be complex due to the fact that people in general can be vastly different in their wants, needs, and expectations. However, one thing that has been found to be true amongst people is their desire for comfort. One middle-range theory that is essential in nursing practice today is the theory of comfort. This theory emphasizes the importance of comfort within the health care setting. Comfort increases the overall experience of

Poe's Theory and Practice Reflected in The Cask of Amontillado

1100 words - 4 pages Poe's Theory and Practice Reflected in The Cask of Amontillado    Edgar Allan Poe, author of "brilliant reviews, poems, and stories," was born in 1809, and sadly died, a young man, in 1849 (665). To truly understand Poe, one must note the time period in which he wrote. It was an age of Literary Realism and Dark Romanticism, which was Poe's arena. The concept of "New Literary Criticism" was not yet mainstream. However, Poe

Contextualising Theory in Practice

2066 words - 8 pages the student is wrong I will coax the answer out of him leaving us both satisfied that the information has been assimilated. Subsequently when involved in the practical application of any lesson I am more confident that the students have the background theory to base their actions upon.In the case of the military students and any vocational learning, theory is an important part of the development but it is the practice which, when developed

The Equilibrium Theory of island biogeography

1646 words - 7 pages Examine critically the Equilibrium Theory of island biogeography. In your answer you are expected to critique its validity and practical usefulness An Island is undoubtfully an appealing study unit. It is less complex than continents or oceans, a visibly distinct object that can be labelled with a title and its resident populations identified thereby (MacArthur RH, Wilson EO, 1967). From a perspective of biogeographical science, MacArthur

Earth's crust is in a state of dynamic equilibrium

1505 words - 6 pages South America. But it wasn't until Wegener put forward his theory that plates moved, that great advances were made into understanding this element of our Earth. It is thought that in the past, Earth had one massive continent called Pangea, 300 million years ago, which has slowly drifted further and further apart.The first piece of evidence to support Wegener's theory came from the discovery of the Mid-Atlantic Ridge. Vine and Matthews, who were

'It is good to have an end to journey toward, but it is the journey that matters in the end' Ursula LeQuin. Discuss this concept with reference to other texts

739 words - 3 pages Ursula LeQuin's concept 'It is good to have an end to journey toward, but it is the journey that matters in the end,' is an accurate, fair comment that relates and compares well to Roberto Benigi's film Life Is Beautiful and 'The Road Not Taken' composed by Robert Frost, whereas The Red Tree a picture book composed by Sean Tan and 'The Love Song of J. Alfred Prufrock' composed by T.S Eliot illustrates contrast to this notion.Roberto Benigi

Response to Roderick Nash´s Essay Island Civilization: A Vision for Human Occupancy of Earth in the Fourth Millenum

773 words - 4 pages on in life meets someone and wants to have a family but now can't? It would just all spiral out of control. That's just the legal side of things, their is no doubt in my mind that people would break this law. It's if the government were to outlaw walking, we have been doing it for so long that it just wouldn't work. Nash explains that according to the terms of a new ecological contract “we would surrender some freedoms like birding cows on the

Investigate that "Game theory is grounded in well established theory, but it is too hard to use in developing and implementing international business strategy"

2620 words - 10 pages IntroductionSince in 1994, John Nash, John Harsanyi, and Reinhard Selten were awarded the Nobel Prize in Economics (Crainer, 1996), business people had started to apply the game theory in the business strategy. Some people argued that game theory is well established theory, but it is too hard to use in developing and implementing international business strategy. In the author's opinion, even though game theory has some demerits to apply in the

What Is the Impact of Showing Empathy in Nursing Practice?

1602 words - 7 pages , has some weaknesses. For example it is somewhat outdated, but was utilised due to there being a limited number of qualitative studies on this topic. A possible limitation in the study, however, is that the patients assessed were receiving hospice care, which often provides a more personal approach than in a hospital ward (Lunt & Neale, 1987). The participants of the study, were mostly female cancer patients, restricting potential findings in

Similar Essays

'human Resource Management Works Well In Theory But Not In Practice'. Discuss

4320 words - 17 pages are very different" (Rolinson et al, 1998). Perhaps the common weakness of all theories within this particular field of Human Resource Management is that they have been designed from a positive perspective, focusing on their potential, rather than substituting their theory for examples of what has happened to organisations post implementation.Since it is established that these concepts will work to some degree in practice, it is proposed that if

Usage Of Nash Equilibrium In Poker

907 words - 4 pages Equilibrium, they both must correctly presume the upcoming action (Osborne & Rubinstein, 1994). Thus it is foreseeable that one or the other side, oftenly, faces a difficulty while striving for an equilibrium. Practically, in a situation where both sides dispose of no more than 10 big blinds, which is considered too low stack, for one, to do anything else but either bet all in or fold his or her cards, Nash Equilibrium advises to go all in with 58.3

Knowledge Management: Is This The Next Step In The Evolution Of Management Theory?

805 words - 3 pages Knowledge Management: Is this the next step in the evolution of management theory?Knowledge management is the latest management theory being adopted by firms. Knowledge management is a process of incorporating intellectual and knowledge based resources, to create a competitive advantage, by sharing them amongst employees and departments to devise the best practices. As pointed out in James Boomer's article it is a common misconception that

1) The Study Of International Business Is Fine If You Are Going To Work In A Large Multinational Enterprise, But It Has No Relevance For Individua

1259 words - 6 pages environmental standards are found to be lower in less developed countries. In addition, they must decide which one foreign market to enter and should be avoided. The domestic business manager was not affected by this factor directly, but they will be affected by the economic downturn of international trade. The study of international business is fine if you are going to work in a large multinational enterprise, but it has no relevance for individuals who are