John Nash's equilibrium concept revolutionized our understanding of strategic interaction. A Nash equilibrium is a strategy profile where no player can improve their outcome by unilaterally changing their strategy - everyone is doing the best they can given what others are doing.

This concept appears everywhere: pricing competition, arms races, traffic patterns, social conventions. Understanding Nash equilibrium helps you predict stable outcomes and identify opportunities to change the game.

But Nash equilibrium has subtleties. Multiple equilibria may exist. Players may need to randomize (mixed strategies). Coordination games reveal that individual rationality doesn't guarantee collective optimality.

In this topic, you'll learn to identify equilibria in strategic situations, understand when they're unique or multiple, and recognize when game structure can be changed to achieve better outcomes. As Harsanyi taught, rational behavior can be formalized and analyzed.