Solution Concept

In game theory, the Nash equilibrium is the best option in the absence of cooperation. A solution concept is a formal rule for predicting how a game will be played. The most commonly used solution concepts are equilibrium concepts, where we look for a set of choices that is optimal for each player. A strategy is dominant if it is always better than any other strategy for any profile of other players’ actions. If a player has a strictly dominant strategy, then they will always play that strategy in equilibrium. A strategy is termed weakly dominant if it earns a player a payoff at least as high as any other strategy. In games of conflict, we are interested in knowing the strategy that reduces our exposure to negative events. To find the equilibrium, we look for dominant strategies and eliminate the dominated ones. This gives us the optimal choice for each player and the equilibrium or a number of different equilibria.