Which of the following is a correct statement?
A)A Nash equilibrium is always perfect.
B)A perfect equilibrium is always Nash.
C)A Nash equilibrium is always perfect in a multistage game.
D)None of the statements associated with this question are correct.

Question

Quizplus · Accepted Answer

A Nash equilibrium is a situation where no player can improve their payoff by unilaterally deviating from their current strategy. It does not imply that the outcome is socially optimal or even optimal for the players involved. A perfect equilibrium, on the other hand, is a refinement of the Nash equilibrium concept, where the outcome is not only a Nash equilibrium but also exhibits a certain level of dynamic consistency. Therefore, every perfect equilibrium is a Nash equilibrium, but not vice versa. Hence, statement B is correct. Statement A is incorrect because not all Nash equilibria are perfect. Statement C is incorrect because a Nash equilibrium need not be perfect even in a multistage game. Statement D is incorrect because statement B is correct.

Which of the Following Is a Correct Statement