However, if a seller wants to start selling toothpaste at higher price while the customers do not want to buy it at that price so he will have to change his strategies which is why Nash equilibrium would not be effective as the price would be lowered. This is why Nash equilibrium is extremely important in economics, especially in the market place as it helps the customers as well as the producers in making the right choice.
Economics with the Concept ofNash Equilibrium Is Practically Useless
According to the McAdams, in the coordination game of Nash equilibrium, both the parties have to make similar decisions to get the maximum profits or benefits. However, it is not very true as it is a belief that if one firm is marketing its products, the others should do it too and if they don’t so their sales would decline and they would be at a disadvantage. But this is not always true proving that the coordination game and Nash equilibrium can be wrong (McAdams, 2009).
In 2013, Trader Joe was named the top store of the world. Although, all the other stores do a lot of marketing, trader Joe has never marketed itself but still its sales are extremely high. This means that even if a company does not follow what the other companies are following it can still be successful. All companies market their products but Trader Joe doesn’t and it is still successful. This means that even without Nash equilibrium, right decisions can be made.
Trader Joe has shown that if a firm only follows its own decisions and it does not get influenced by others, it can still benefit a lot. It works on intuitional behaviour and it has been extremely successful and if a person works through intuition so he can also progress well which would not be the case with Nash Equilibrium. Nash Equilibrium has on one hand provided a good platform to make decisions. But on the other, it has been making economics useless which is extremely bad.