Editing Nash equilibrium (section)

=== Nash equilibria in a payoff matrix ===
There is an easy numerical way to identify Nash equilibria on a payoff matrix. It is especially helpful in two-person games where players have more than two strategies. In this case formal analysis may become too long. This rule does not apply to the case where mixed (stochastic) strategies are of interest. The rule goes as follows: if the first payoff number, in the payoff pair of the cell, is the maximum of the column of the cell and if the second number is the maximum of the row of the cell{{snd}} then the cell represents a Nash equilibrium.

We can apply this rule to a 3×3 matrix:
{| class="wikitable floatleft" style="text-align:center; font-size:95%; margin-right:1em; margin-bottom:1ex"
|+ A payoff matrix – Nash equilibria in bold
!scope="col" rowspan="2"| Player 1<br/> strategy
!scope="col" colspan="3"| Player 2 strategy
|-
!scope="col"| Option A
!scope="col"| Option B
!scope="col"| Option C
|-
!scope="row"| Option A
| 0, 0
| '''25, 40'''
| 5, 10
|-
!scope="row"| Option B
| '''40, 25'''
| 0, 0
| 5, 15
|-
!scope="row"| Option C
| 10, 5
| 15, 5
| '''10, 10'''
|}

Using the rule, we can very quickly (much faster than with formal analysis) see that the Nash equilibria cells are (B,A), (A,B), and (C,C). Indeed, for cell (B,A), 40 is the maximum of the first column and 25 is the maximum of the second row. For (A,B), 25 is the maximum of the second column and 40 is the maximum of the first row; the same applies for cell (C,C). For other cells, either one or both of the duplet members are not the maximum of the corresponding rows and columns.

This said, the actual mechanics of finding equilibrium cells is obvious: find the maximum of a column and check if the second member of the pair is the maximum of the row. If these conditions are met, the cell represents a Nash equilibrium. Check all columns this way to find all NE cells. An N×N matrix may have between 0 and N×N [[pure strategy|pure-strategy]] Nash equilibria.

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