A sub-game perfect Nash equilibrium is defined as
A) a set of strategies that are a Nash equilibrium in every subgame of a static game.
B) a set of strategies that are a Nash equilibrium in every subgame of a dynamic game.
C) a set of strategies that are a Nash equilibrium in a single subgame of a dynamic game.
D) the game within the game.

Question

Quizplus · Accepted Answer

A sub-game perfect Nash equilibrium is a set of strategies that are a Nash equilibrium in every subgame of a dynamic game. This means that the equilibrium remains stable not only in the overall game but also in any smaller game that may arise at any point during the dynamic game. Thus, option B correctly defines sub-game perfect Nash equilibrium.

A Sub-Game Perfect Nash Equilibrium Is Defined as