2. What did my person do?
• John Nash (1928 -) was an
mathematician and economist.
• He developed several theories that
were relevant in understanding
economic interaction.
• His most important contribution was the
theory of Nash Equilibrium.
• He currently teaches at Princeton
4. • Nash Equilibrium is a concept originally
developed to model simple games.
• Effectively, it says this: For any two groups
that do not cooperate, there will be a point at
which neither group can benefit from
unilateral action, and that the groups will hold
their strategies constant at this point.
5. What this means
• The Nash Equilibrium is not usually the
most efficient strategy; it is only the best
one without cooperation.
• Through cooperation, it is likely that
both parties will be able to increase
their utility.
6. Why this is important to
Economics
• Since Nash Equilibria are usually not
the optimal solutions, they highlight the
benefits of communication between
groups.
• This communication is necessary; the
unconscious laws of the market will not
always produce the best solutions.
7. How this influences our thinking
• Nash Equilibrium provides a strong
case for government regulation,
because a government can serve as a
catalyst for change.
• It can also prompt companies to make
contracts with each other so they can
cooperate and maximize utility.
8. Works Cited:
• A Beautiful Mind: a biography of John Forbes Nash,
Jr. New York: Simon & Schuster, 1998. Print.
• The Essential John Nash. Princeton: Princeton UP,
2001. Print.
• Game Theory: Lecture Transcript 5. Yale University.
Yale. Yale University, 19 Sept. 2007. Web. 9 Feb.
2010. <http://oyc.yale.edu/economics/game-
theory/contents/transcripts/transcript-5-nash-
equilibrium-bad-fashion-and-bank>.
• Nash Equilibrium and the History of Economic
Theory. Chicago: Journal of Economic Literature,
1999. University of Chicago. University of Chicago,
Mar. 1999. Web. 9 Feb. 2010.
<http://home.uchicago.edu/~rmyerson/research/jelna
sh.pdf>.
