Stable, but Stuck: When Nash Equilibria Fail Us
I’ve been reading Inadequate Equilibria recently, and it sent me down a familiar but still slightly unsettling line of thought: how often systems end up in states that are stable, self-reinforcing—and clearly not very good. This is usually where the idea of a Nash equilibrium comes in. In simple terms, it describes a situation where no individual actor can improve their outcome by changing their strategy alone, assuming everyone else keeps doing what they’re doing. The system settles. It stops moving. But that doesn’t mean it’s optimal. It just means it’s hard to escape. The classic example is the prisoner’s dilemma. Two actors, each making individually rational choices, end up with a worse collective outcome than if they had coordinated. What makes it powerful is not that it is a thought experiment, but that it maps disturbingly well onto real-world systems. A system can remain balanced even as both sides make it worse. Arms Races: Stability Through Mutual Escalation The Cold ...