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In game theory, the Nash equilibrium, named after the mathematician John Forbes Nash Jr., is a proposed solution of a non-cooperative game involving two or more players in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only their own strategy. (...) can be connected with observable phenomenon. One interpretation is rationalistic: if we assume that players are rational, know the full structure of the game, the game is played just once, and there is just one Nash equilibrium, then players will play according to that equilibrium. This idea was formalized by Aumann, R. and A. Brandenburger, 1995, Epistemic Conditions for Nash Equilibrium, Econometrica, 63, 1161-1180 who interpreted each player's mixed strategy as a conjecture about the behaviour of other players and have shown that if the game and the rationality of players is mutually known and these conjectures are commonly know, then the conjectures must be a Nash equilibrium (a common prior assumption is needed for this result in general, but not in the case of two players. In this case, the conjectures need only be mutually known).t is unnecessary to assume that the participants have full knowledge of the total structure of the game, or the ability and inclination to go through any complex reasoning processes. What is assumed is that there is a population of participants for each position in the game, which will be played throughout time by participants drawn at random from the different populations. If there is a stable average frequency with which each pure strategy is employed by the average member of the appropriate population, then this stable average frequency constitutes a mixed strategy Nash equilibrium. In game theory, the Nash equilibrium, named after the mathematician John Forbes Nash Jr., is a proposed solution of a non-cooperative game involving two or more players in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only their own strategy.

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