In game theory, a solution concept is a formal rule for predicting how a game will be played. These predictions are called "solutions", and describe which strategies will be adopted by players and, therefore, the result of the game. The most commonly used solution concepts are equilibrium concepts, most famously Nash equilibrium.
Many solution concepts, for many games, will result in more than one solution. This puts any one of the solutions in doubt, so a game theorist may apply a refinement to narrow down the solutions. Each successive solution concept presented in the following improves on its predecessor by eliminating implausible equilibria in richer games.
Read more about Solution Concept: Formal Definition, Rationalizability and Iterated Dominance, Nash Equilibrium, Backward Induction, Subgame Perfect Nash Equilibrium, Perfect Bayesian Equilibrium, Forward Induction
Famous quotes containing the words solution and/or concept:
“To the questions of the officiously meddling police Falter replied absently and tersely; but, when he finally grew tired of this pestering, he pointed out that, having accidentally solved “the riddle of the universe,” he had yielded to artful exhortation and shared that solution with his inquisitive interlocutor, whereupon the latter had died of astonishment.”
—Vladimir Nabokov (1899–1977)
“One concept corrupts and confuses the others. I am not speaking of the Evil whose limited sphere is ethics; I am speaking of the infinite.”
—Jorge Luis Borges (1899–1986)