It represents the final payoff resulting from a set of actions that individuals can take within the context of the game.
In other words, a Nash equilibrium is a set of strategies in which each player is doing the best possible, assuming what the others are doing to receive the most optimal outcome for themselves.
[6] A common example of the nash equilibrium and undesirable outcomes is the Prisoner’s Dilemma game.
It is assumed that human people make all of their economic decisions based only on the idea that they are irrational.
A player's rewards (utilities, profits, income, or subjective advantages) are assumed to be maximised.
[11] Examples of this include stock trades and investments, cost of goods in business, corporate behaviour and even social sciences.
[citation needed] Equilibria are not always Pareto efficient, and a number of game theorists design ways to enforce Pareto efficient play, or play that satisfies some other sort of social optimality.