Nash Equilibrium
Plain definition
A Nash equilibrium is a set of strategies, one for each player, such that no player can improve their own payoff by unilaterally changing strategy while the others keep theirs fixed.
In economics
Named after John Nash, this is the central solution concept of non-cooperative game theory. It underlies models of oligopoly (Cournot), auctions, and bargaining, and explains why individually rational choices can produce collectively poor outcomes like the prisoner's dilemma.
Example
In the prisoner's dilemma, both prisoners confessing is the Nash equilibrium: neither can do better by denying while the other confesses, even though both would prefer mutual denial.
Many students think a Nash equilibrium must be the best outcome for everyone, but it only requires that no single player regrets their choice; equilibria can be jointly terrible.