ARTIVIST : contracting based on the Nash Equilibrium

2 08 2010

Recently ARTIVIST : creative has developed a series of contracts that involve a shared risk/shared profit that helps venues & artists achieve a common goal – successful events!

subgame perfect Nash equilibrium

The contract, developed for Salmonella Dub, lowers standard deposits & works on a percentage break of gross profit; both the artist & the venue need to expel effort to maximise returns & both benefit greatly by working together to achieve this success.

“We modelled the contract at a couple of gigs earlier this year & it went well… since then a major festival has picked up the idea & it was essential in securing acts” says JoFF Rae of the contract… “the key is to make an agreement & see the benefits to yourself & to others in the equation & stick to it through to delivery – possibly a practical example of the Nash Equilibrium.

The Nash Equilibrium – informal definition:

From Wikipedia, the free encyclopedia

Informally, a set of strategies is a Nash equilibrium if no player can do better by unilaterally changing his or her strategy. To see what this means, imagine that each player is told the strategies of the others. Suppose then that each player asks himself or herself: “Knowing the strategies of the other players, and treating the strategies of the other players as set in stone, can I benefit by changing my strategy?”

If any player would answer “Yes”, then that set of strategies is not a Nash equilibrium. But if every player prefers not to switch (or is indifferent between switching and not) then the set of strategies is a Nash equilibrium. Thus, each strategy in a Nash equilibrium is a best response to all other strategies in that equilibrium.[3]

The Nash equilibrium may sometimes appear non-rational in a third-person perspective. This is because it may happen that a Nash equilibrium is not Pareto optimal.

The Nash equilibrium may also have non-rational consequences in sequential games because players may “threaten” each other with non-rational moves. For such games the Subgame perfect Nash equilibrium may be more meaningful as a tool of analysis.