What is the relationship between dominant strategy equilibrium and Nash equilibrium?

What is the relationship between dominant strategy equilibrium and Nash equilibrium?

According to game theory, the dominant strategy is the optimal move for an individual regardless of how other players act. A Nash equilibrium describes the optimal state of the game where both players make optimal moves but now consider the moves of their opponent.

What is the difference between a market equilibrium and a competitive market equilibrium?

Competitive Equilibrium vs. Competitive equilibrium is often used to describe just a single market for one good. An extension of competitive equilibrium to all markets in an economy simultaneously is known as general equilibrium. General equilibrium is also called Walrasian equilibrium.

What is the difference between pure strategy Nash equilibrium and Nash equilibrium?

Nash equilibrium is (by definition) a profile (set of strategies – one for each player) on which every player descreases his payoff chaniging his strategy if all the rest players do not change their strategies. Pure strategies are the strategies when every player chooses the same strategy each time.

Is a dominant strategy equilibrium also a Nash equilibrium?

A dominant strategy equilibrium is reached when each player chooses their own dominant strategy. It must be noted that any dominant strategy equilibrium is always a Nash equilibrium. However, not all Nash equilibria are dominant strategy equilibria.

What is the relationship between AR and MR under perfect competition?

Clearly with sale of every additional unit of the product, additional revenue (i.e. MR) and average revenue (AR) will become equal to Price. Hence both AR and MR will be equal to each other. Thus MR = AR in perfect competition.

When a competitive equilibrium is achieved in a market?

In a perfectly competitive market an equilibrium is achieved when supply equates to demand. Thus, price varies until QS = QD. Two key mechanisms are involved in ensuring that if price is not at this clearing level, it will adjust until it reaches that level.

What is the main difference between pure strategy and mixed strategy?

A pure strategy involves all players making their moves simultaneously, while a mixed strategy minimizes the losses of players.

Why is a Nash equilibrium called an equilibrium?

Nash equilibrium is named after its inventor, John Nash, an American mathematician. To quickly find the Nash equilibrium or see if it even exists, reveal each player’s strategy to the other players. If no one changes their strategy, then the Nash equilibrium is proven.