Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/130826
Authors: 
Streb, Jorge M.
Year of Publication: 
2015
Series/Report no.: 
Serie Documentos de Trabajo, Universidad del CEMA 575
Abstract: 
A Nash equilibrium can also be seen as a Cournot-Nash equilibrium, though this is debated because Cournot provided a specific application, not a general formulation. In my view, another of Nash's fundamental contributions stands out when contrasting him to Cournot. Cournot treated economic decisions as optimization problems, but his stability analysis of duopoly led to endless discussions because players did not use the available information. Nash solves this with his rational interpretation: when players know the structure of the game, they can use the solution to predict the equilibrium. He thus introduces rational expectations. Nash additionally offers an adaptive interpretation: when players do not know the structure of the game, they can adjust their strategies to maximize payoffs. These adaptive expectations were anticipated by Cournot in his analysis of monopoly. In brief, Nash was not only extraordinary as a mathematician; his deep insights allow solving decades-long debates in economics.
Subjects: 
equilibrium
rational players
consistent beliefs
adaptive expectations
rational expectations
JEL: 
B1
B2
B3
C7
Document Type: 
Working Paper

Files in This Item:
File
Size
530.68 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.