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  • Definition of Supply-Side Equilibrium in the WS-PS Model

Nash Equilibrium as a Predicted Long-Run Outcome

A Nash equilibrium is used to predict the long-term outcome of an economic model because it represents a stable state. In any situation that is not a Nash equilibrium, at least one individual has an incentive to change their strategy to achieve a better result. Such changes alter the overall outcome, meaning the situation is unstable and not expected to persist. Only when a Nash equilibrium is reached, where no one can benefit from unilaterally changing their actions, does the outcome become stable and predictable over the long run.

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References

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Economics

Economy

Introduction to Macroeconomics Course

Ch.1 The supply side of the macroeconomy: Unemployment and real wages - The Economy 2.0 Macroeconomics @ CORE Econ

The Economy 2.0 Macroeconomics @ CORE Econ

CORE Econ

Social Science

Empirical Science

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