Nash equilibrium

John Nash's great contribution to economics - the one for which he was awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 1994 - is his proof, in his 1950 Princeton PhD thesis, of the Fundamental Theorem of Game Theory which states, roughly, that every game has at least one solution.

A little more needs to be said: a game in this context is a set of possible actions and interactions between players where each outcome has some value to each player. And a solution is that the game has a Nash equilibrium, where this means that it is true of each player that they are doing the best they can given what the others are doing. The key breakthrough in Nash's PhD is in this concept of the equilibrium. I am doing the best I can do given what you're doing; and you're doing the best given what I'm doing. It is natural to call such a situation an equilibrium because, if you're in it, there's no good reason to deviate from it. Since everyone's doing best, no one has a reason to deviate.

To me, there are two very striking things about the result: