A set of strategies that constitute a Nash equilibrium, where the actions prescribed by these strategies for the players once they reach any subgame constitute a Nash equilibrium for that subgame is called a(n)
A) subgame perfect equilibrium
B) imperfect subgame equilibrium
C) backward equilibrium

Question

Quizplus · Accepted Answer

A subgame perfect equilibrium is a refinement of Nash equilibrium, where the strategies prescribed not only constitute a Nash equilibrium for the overall game but also for every subgame of the original game. This means that the strategies are optimal not only at the beginning of the game but also at every decision point within the game. Therefore, a subgame perfect equilibrium is a more stringent and desirable solution concept than a simple Nash equilibrium, and thus, choice A is the best answer. Choice B, imperfect subgame equilibrium, is not a well-defined concept, and choice C, backward equilibrium, is not a recognized equilibrium concept.

A Set of Strategies That Constitute a Nash Equilibrium, Where