Nash equilibrium: Named after U.S. mathematician John Nash (1928-). In game theory, a concept where each player’s best strategy is to maintain her present (non-cooperative) behaviour given the present behaviour of the other players.
oh what a beautiful mind.
creative destruction: Coined by economist Joseph Schumpeter (1883-1950). The elimination of one product by a superior product, the process of competition through innovation. Argued as the driving force of economic growth and the raising of living standards.
Oligopolies. Patents. Incentives to innovate.
Neoclassical theories. Growth & development. Steady-state economics.
random fact: Schumpeter considered Léon Walras (1834-1910) as the greatest of all economists. And he didn’t think Adam Smith (1723-1790) was all that hot.
Vilfredo Pareto (1843-1923), who introduced the notion of Pareto-optimality (duh), also made a famous observation that 20% of the population in Italy owned 80% of the property. Italian/French engineer who turned to economics, he took over as chair in political economy from Walras at the University of Lausanne.
Though apparently they didn’t get along too well together.
Walras‘ father was a schoolmate of Augustin Cournot, who came up with an economic model to describe duopoly competition. That model’s prediction is that firms will choose Nash equilibrium output levels.