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Homework answers / question archive / 1-A Nash equilibrium: A- sometimes may not be reached because people assume others react rationally

1-A Nash equilibrium: A- sometimes may not be reached because people assume others react rationally

Economics

1-A Nash equilibrium: A- sometimes may not be reached because people assume others react rationally. B- sometimes may not be reached because people do not assume that others act rationally. C- is always reached in game playing. D- will always be reached. Please indicate the correct answer. 

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Answer - correct option is B

Reason - Nash equilibrium sometimes may not be reached people do not assume that others act rationally This is because nash equilibrium may not necessarily be Pareto optimal and it may also result in non rational consequences in sequential games as people may threaten each other with non rational moves.

Other option are wrong because -

  • Nash equilibrium sometimes may mot be reached because people do not assume other may act rationally therefore option A is incorrect.
  • Nash equilibrium is not always reached in game playing because all players do not understand the game therefore nash equilibrium can only be reached in game playing when all players understand the game and the playoff which is associated with each other hence option C is also wrong
  • Nash equilibrium cannot always be reached there exits a mixed nash equilibrium . Hence option D is also wrong