# How do you find Nash equilibrium with best response?

## How do you find Nash equilibrium with best response?

1. Find the firms’ best response functions. To find the best response of firm 1 to any action a2 of firm 2, fix a2 and solve. maxa1a1(c + a2 a1).
2. A Nash equilibrium is a pair (a1*,a2*) such that a1* = b1(a2*) and a2* = b2(a1*). Thus a Nash equilibrium is a solution of the equations a1* = (c + a2*)/2. a2* = (c + a1*)/2.

## How do you determine the best response function?

To find best response function of firm 1, look at its payoff as a function of its output, given output of firm 2. Any price greater than p2 is a best response to p2: B1(p2) = {p1 : p1 > p2}. Note: a price between p2 and c is a best response!

What is the fastest way to get Nash equilibrium?

59 second clip suggested7:30How to find Nash Equilibrium in a 2X2 payoff matrix – YouTubeYouTubeStart of suggested clipEnd of suggested clipSo here I’m gonna go with high and low and then here I will also have high and low. And then we willMoreSo here I’m gonna go with high and low and then here I will also have high and low. And then we will get our payoff matrix. So when I talk about finding the Nash equilibrium.

How do you write a good response correspondence?

59 second clip suggested16:58Finding Mixed Strategy Nash equilibrium & Best ResponseYouTubeStart of suggested clipEnd of suggested clipSo rows best response to left rows best response of row player to left that’s what this notation.MoreSo rows best response to left rows best response of row player to left that’s what this notation. Saying. This is best response notation.

### Is best response the same as Nash equilibrium?

The concept of a best response is central to John Nash’s best-known contribution, the Nash equilibrium, the point at which each player in a game has selected the best response (or one of the best responses) to the other players’ strategies (Nash 1950).

Is the best outcome in a game always a Nash equilibrium?

Unlike dominant strategy, the Nash equilibrium doesn’t always lead to the most optimal outcome, it just means that an individual chooses the best strategy based on the information they have.

What’s the difference between dominant strategy 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.