Tuesday, March 10, 2009

Nash Equilibrum - what Moldovan politicians could learn from "A Beauriful Mind"

Here is a real challenge for you! We discussed in class how the Moldovan government is not exactly creating a friendly-entrepreneurial environment for young people. You all agreed that because every single member of the government cares only about his or her interests and is struggling hard to protect their assets / business ventures, it makes sense that our country is not making any significant progress (so far at least). You have probably all watched "A Beautiful Mind" and the unforgettable performance of Russel Crow and his explanation for the "equilibrium theory" - Read the following article carefully and answer the following questions:
- What did John Nash say about Adam Smith's theory?
- What did John Nash get a Nobel Prize for?
- What could our Moldovan business people and members of the parliament learn fron Nash's equilibrum theory?
- What long and short time impact could it have on the Moldovan economy in general and on the way young people do business in Moldova?
For your reference: Watch the Yale University Lecture on the equillibrum theory.


  1. I was really amazed with the detailed explanation of the Nash's game theory in the film. After watching it, I visited some websites and found more about it.
    John Nash said that Adam Smith's theory was wrong, because when somebody wants to achieve smth, he is thinking only about his personal gain, not taking into consideration other's opinion or decisions. That's why Nash suggested, in order all not being in a loss, to make decisions thinking about him/herself and the group.
    Thanks to this "Game theory" John Nash shared the 1994 Nobel Memorial Prize in Economic Sciences with game theorists Reinhard Selten and John Harsanyi.
    I consider that our Moldovan Government and business people should learn a lot from Nash's theory of equilibrium, because in this way they will probably learn to be not so selfish, and will try to take into consideration not only their own opinions and think only about their own gain, but think about others.
    Our Moldovans , unfortunately, have a restricted way of thinking, and i think it would be rather difficult for them to understand. So, i can tell that it would take years to change Moldova in a better way.

  2. Nash Equilibrum is an example of how different individuals or entities - players in a game- change their decisions, strategies with regard of how these changes accures in other players decisions, former ones being influenced by them. This game theory of John Nash, for which he shared a Nobel prize in 1994, is a demonstration of the fact that through coordination there can be achieved one certain result - equilibrium in peoples' decisions to do or not to do something. As for me, it is something similar to a "herd effect" - when a majority has an impact on other side of dicisions, resulting after a while, in an equilibrum - when everyone start sharing the same dicision.
    The theory of John Nash was in a contradiction with Adam's Smith's one, which implied that everyone must care first of all about personal gain, while Nash considered that when " we try doing well for ourselves and at the same time, think for gain of the whole group".
    Nash Equilibrum would be as "a rain in the dry days" for the members of parliament because its outcome would be - no divergence concerning the choice of economic policies to implement, which would result, at the same time, in a more effective way of bringing them into life. What concerns businesses, as the theory says, nash equilibrum would maximize the profits for the players of the same game...