Have you been struggling with two-man missions lately? It turns out that economics is the wingman you needed all along.
Sounds crazy, right? But one of economics’ greatest minds, John Nash, actually explained similar situations through equations of strategy and equilibrium. In the movie A Beautiful Mind, we see Nash and three other students encounter five girls at a bar, one of them being clearly the most attractive. Naturally, all four of them want to dance with her, but Nash explains that if everyone goes for her, they’ll block each other. Not only will no one get to dance with her, but also the other girls will feel like second options and won’t be too eager to dance either. However, if they cooperate and agree that each guy approaches one of the other four girls, everyone ends up with a dance partner. The underlying message is that when everyone chases the same prize, it affects the chances for all.
Economically, this idea revolutionized how we think about competition. It challenged the classical view of Adam Smith, who argued that people acting upon their self-interest benefit society because competition forces efficiency and innovation. In contrast, Nash observed that in many real-world situations, pure self-interest doesn’t produce harmony or growth, but rather leads to chaos and inefficiency.
John Nash continued to explore this idea, which ultimately led to the development of a key branch of game theory. His most famous concept, the Nash Equilibrium, explains that the best outcome occurs when no one wants to switch their strategy after seeing what everyone else is doing. His research on Non-cooperative games led to the Nobel Prize in Economics in 1994.
Just as those students at the bar, firms in competitive markets behave strategically. When a firm lowers its prices to try to steal customers from a competitor, it can start a price war that ultimately lowers everyone’s profits. Cooperation, or at least consideration of others’ strategies (since coordination is considered a form of illegal collusion among firms), can leave all players better off than trying to compete for the same goal. Nash’s ideas changed economics from “everyone acting selfishly” to “everyone acting strategically,” and it's the reason behind why companies can cooperate without explicit communication through tacit understandings, or why nations negotiate over engaging in trade wars, and why a good wingman always communicates their strategy before making a move.
So next time you’re out, communicate, read the room, and play the game like an economist. Not by chasing the same prize, but by finding the strategy where everyone walks away better off and reaches Nash Equilibrium.