📚 Learning Guide
Nash Equilibrium in Game Theory
medium

In a non-cooperative game involving two players, Player A and Player B, each has two strategies: to cooperate or defect. If both players choose to cooperate, they receive a payoff of 3 each. If both defect, they receive a payoff of 1 each. If one cooperates and the other defects, the defector receives a payoff of 5 while the cooperator receives 0. What is the Nash Equilibrium in this scenario?

Master this concept with our detailed explanation and step-by-step learning approach

Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
Explore Topic

Choose the Best Answer

A

Both players cooperate

B

Both players defect

C

Player A cooperates while Player B defects

D

Player A defects while Player B cooperates

Understanding the Answer

Let's break down why this is correct

Answer

In this game, a Nash Equilibrium occurs when neither player can improve their payoff by changing their strategy while the other player's strategy remains the same. Here, if both players choose to cooperate, they each get 3, but if one defects while the other cooperates, the defector gets 5 and the cooperator gets nothing. If both players defect, they both receive 1; however, this is worse than cooperating together. Therefore, the Nash Equilibrium in this game is when both players choose to defect, as neither player can unilaterally change their strategy to get a better outcome. For example, if Player A defects while Player B cooperates, Player A gets 5, but if Player B decides to defect instead, Player A's best response is to defect as well, leading them both to the payoff of 1.

Detailed Explanation

In this game, if both players defect, they each get 1 point. Other options are incorrect because Some might think cooperation is best since they both get 3 points; This option seems appealing, but it shows a misunderstanding.

Key Concepts

strategic interaction
non-cooperative game
Topic

Nash Equilibrium in Game Theory

Difficulty

medium level question

Cognitive Level

understand

Ready to Master More Topics?

Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.