Berge equilibrium

Berge equilibrium

The Berge equilibrium is a game-theory solution-concept named after the mathematician Claude Berge. It is similar to the standard nash-equilibrium, except that it aims to capture a type of altruism rather than purely non-cooperative play. Whereas a Nash equilibrium is a situation in which each player of a strategic game ensures that they personally will receive the highest payoff given other players' strategies, in a Berge equilibrium every player ensures that all other players will receive the highest payoff possible. Although Berge introduced the intuition for this equilibrium notion in 1957, it was only formally defined by Vladislav Iosifovich Zhukovskii in 1985, and it was not in widespread use until half a century after Berge originally developed it.

History The Berge equilibrium was first introduced in Claude Berge's 1957 book Théorie générale des jeux à n personnes. Moussa Larbani and Vladislav Iosifovich Zhukovskii write that the ideas in this book were not widely used in Russia partly due to a harsh review that it received shortly after its translation into Russian in 1961, and they were not used in the English speaking world because the book had only received French and Russian printings. These explanations are echoed by other authors, with Pierre Courtois et al. adding that the impact of the book was likely dampened by its lack of economic examples, as well as by its reliance on tools from graph theory that would have been less familiar to economists of the time.

Berge introduced his original equilibrium notion only in intuitive terms, and the first formal definition of the Berge equilibrium was published by Vladislav Iosifovich Zhukovskii in 1985. The topic of Berge equilibria was then studied in detail by Konstantin Semenovich Vaisman in his 1995 PhD dissertation, and Larbani and Zhukovskii document that the tool became more widely used in the mid-2000s as economists became interested in increasingly complex systems in which players might be more inclined to seek globally favourable equilibria and attach value to other players' payoffs.

Informal definition The players in a game are playing a Berge equilibrium if they have chosen a strategy profile such that, if any given player <math>i</math> sticks with their chosen strategy while some of the other players change their strategies, then player <math>i</math>'s payoff will not increase. So, every player in a Berge equilibrium guarantees the best possible payoff for every other player who is playing their Berge equilibrium strategy; this is a contrast with Nash equilibria, in which each player <math>i</math> is only concerned about maximizing their own payoffs from their strategy, and no other player cares about the payoff obtained by player <math>i</math>.

Motivation The Berge equilibrium has been motivated as the exact opposite of a Nash equilibrium, in that while the Nash equilibrium models selfish behaviours, the Berge equilibrium models altruistic behaviours. Moussa Larbani and Vladislav Iosifovich Zhukovskii note that Berge equilibria could be interpreted as a method for formalising the Golden Rule in strategic interactions. The Berge equilibrium solution concept may also be used for games that do not satisfy the conditions for Nash's existence theorem and have no Nash equilibria, such as certain games with infinite strategy sets, or in situations where equilibria in pure strategies are desired and yet there are no Nash equilibria among the pure strategy profiles.

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