Nash's Nobel

Document description

We've all been to see A Beautiful Mind, the Oscar winning film about John Nash, starring Russell Crowe. Although Nash won a Nobel for economics, the film focuses on the love story and mental health aspects. So if you're the rare actuary whose education has left intact some residue of intellectual curiosity, you might have left the film with a few unanswered questions. In insurance, game theory has been proposed for evaluation of strategic options involving competitor responses, and explanation of phenomena such as premium cycles. This note explains the concept of a Nash equilibrium, outlining the game theory context and the key results for which Nash gained his Nobel.