Remembering a cornerstone of game theory: John Nash's Equilibrium Points
Tuesday, 26 May 2015
“John Nash’s contributions to Game Theory opened the door to modern economic theory," says Carlos Pimienta from the UNSW Business School. “Game theory provides a structured way to study strategic interactions and we can use it to understand business strategy, contracts, auctions, voting systems, crime, bargaining, and virtually any social interaction you can think of."
John Nash died in a car accident in New Jersey over the weekend. The story of his life was developed into the Oscar-winning film ‘A Beautiful Mind’.
“John Nash taught us how to solve those interactions by formally defining 'equilibrium points', what we call now Nash equilibria. A Nash equilibrium is a description of behaviour for every agent involved in the situation we want to analyse, and it has the property that each agent is doing only what is individually best for them," he says.
"The complication is that this is a circular problem, what is best for me depends on what you do and what is best for you depends on what I do. Nash resolved this by proving that, under some mild conditions, those strategic interactions always have at least one Nash equilibrium."
Carlos Pimienta is a Senior Lecturer at the UNSW Business School where he has published research studying properties of Nash equilibria and other equilibrium concepts.
"Attempts to explain some social interaction in economics consist of formalising the situation, finding its Nash equilibrium, and then use it to understand real-life behaviour. That's why John Nash's work is so fundamental to Economics."
For further comment call Carlos Pimienta on 02 9385 3358, or Email email@example.com.
Media contact: Julian Lorkin: 02 9385 9887