A subgame-perfect equilibrium is a Nash equilibrium that
A)cannot persist through several periods.
B)involves only credible threats.
C)consists only of dominant strategies.
D)is unique.

Question

Quizplus · Accepted Answer

A subgame-perfect equilibrium involves only credible threats, meaning that the strategies are credible at every point in the game, not just at the beginning. This ensures that the equilibrium is consistent and credible throughout the entire game, including all possible subgames.

A Subgame-Perfect Equilibrium Is a Nash Equilibrium That