Beyond Nash Equilibrium: Solution Concepts for the 21st Century

TL;DR

This paper reviews limitations of Nash equilibrium in game theory, especially from a computer science perspective, and discusses alternative solution concepts that address issues like robustness, coalitions, computational costs, and incomplete information.

Contribution

It surveys new solution concepts that overcome Nash equilibrium's shortcomings, integrating insights from game theory and computer science.

Findings

Nash equilibrium is not robust to unexpected behaviors.

Traditional Nash equilibrium fails to handle coalitions and computational costs.

Alternative solution concepts better address real-world complexities.

Abstract

Nash equilibrium is the most commonly-used notion of equilibrium in game theory. However, it suffers from numerous problems. Some are well known in the game theory community; for example, the Nash equilibrium of repeated prisoner's dilemma is neither normatively nor descriptively reasonable. However, new problems arise when considering Nash equilibrium from a computer science perspective: for example, Nash equilibrium is not robust (it does not tolerate ``faulty'' or ``unexpected'' behavior), it does not deal with coalitions, it does not take computation cost into account, and it does not deal with cases where players are not aware of all aspects of the game. Solution concepts that try to address these shortcomings of Nash equilibrium are discussed.