What can be said about a non-credible threat that is part of a Nash equilibrium in a sequential game?
A) It is also part of a sub-game perfect Nash equilibrium.
B) It cannot be part of a sub-game perfect Nash equilibrium.
C) It can be a dominated strategy.
D) It may be a dominant strategy.

Question

Quizplus · Accepted Answer

In a sequential game, a non-credible threat is a threat that a player cannot or will not carry out. As such, it cannot be part of a sub-game perfect Nash equilibrium because it is not a credible threat that can affect the outcome of the game. Therefore, option B is the correct answer. Option A is incorrect because a non-credible threat can never be part of a sub-game perfect Nash equilibrium. Option C is also incorrect as a non-credible threat cannot be a dominated strategy because it is not a valid option for the player who makes it. Option D is incorrect because a non-credible threat cannot be a dominant strategy, since it cannot affect the opponent's behavior or outcome of the game.

What Can Be Said About a Non-Credible Threat That Is