Risk dominance and
payoff dominance are two related refinements of the
Nash equilibrium (NE)
solution concept in
game theory, defined by
John Harsanyi and
Reinhard Selten. A Nash equilibrium is considered
payoff dominant if it is
Pareto superior to all other Nash equilibria in the game. When faced with a choice among equilibria, all players would agree on the payoff dominant equilibrium since it offers to each player at least as much payoff as the other Nash equilibria. Conversely, a Nash equilibrium is considered
risk dominant if it has the largest
basin of attraction (i.e. is less risky). This implies that the more uncertainty players have about the actions of the other player(s), the more likely they will choose the strategy corresponding to it.