definitions Nash equilibrium

Nash equilibrium

Equilibrium in game theory in which each player's action is optimal given the actions of the other players. E.g., in a tariff-and-retaliation game, with each country able to improve its terms of trade with a tariff, zero tariffs are not Nash, since each can do better by raising its tariff. Nash equilibrium, with positive tariffs, is likely to be inferior to free trade for both.