Application of Nash Equilibrium: Taking the Game Between Enterprises as an Example

Abstract

The game theory of microeconomics is one of the important analysis and decision-making tools for managing enterprises. Von Neumann discusses the zero-sum game of two people, while Nash discusses a broader range of games. This paper aims to explore the important concept of Nash Equilibrium in game theory. With the wide application of Nash Equilibrium in different fields such as economics, politics, psychology and machine learning, it is becoming increasingly important to understand and apply Nash Equilibrium. The author first introduces the concept and mathematical definition of Nash Equilibrium, and then takes the "Prisoner's Dilemma" game as an example to elaborate its application methods and significance in detail. Subsequently, the author discusses the limitations of Nash Equilibrium, including the inability to guarantee the maximum profit, and proposes corresponding solutions. Finally, the author explores the applications of Nash Equilibrium in different fields, as well as the prospects in machine learning and artificial intelligence fields.