An equilibrium occurs in a game when
A)price equals marginal cost
B)quantity supplied equals quantity demanded
C)all independent strategies counterbalance all determinate strategies
D)all players follow a strategy that negates the strategies of at least one other player
E)all players follow a strategy that they have no incentive to change

Question

Quizplus · Accepted Answer

An equilibrium occurs in a game when all players follow a strategy that they have no incentive to change. This is known as a Nash equilibrium. It is a situation where each player is doing the best they can given the strategies of the other players. In this situation, no player has an incentive to change their strategy because any deviation from their current strategy would result in a decrease in their payoff. Therefore, option E is the correct answer.

An Equilibrium Occurs in a Game When