[This is part of the series: The Complete Guide To Economics 101.]
What is Nash Equilibrium?
Nash Equilibrium is a situation where the best choice in a game or competition is sticking with you original decision – even after you consider the possible decisions of your competitors.
The best example of this is, Prisoner’s Dilemma.
Two robbers are arrested and questioned by the police.
Should they both confess?
What if one confesses and the other does not?
Turns out, the Nash Equilibrium – and the way they both stay out of jail – is if both keep their mouth shut.