Consider the game between the teens from the previous question. Instead of being a simultaneous game,suppose it is sequential,with teen A moving first. What is the subgame-perfect equilibrium of this new game?
A)Both Declare.
B)Both Ignore/Rebuff.
C)It is a mixed strategy equilibrium.
D)Teen A Declares and Teen B follows A's action.

Question

Quizplus · Accepted Answer

In a sequential game, the subgame-perfect equilibrium is found by working backward from the final node. Teen B knows that if they ignore/rebuff A's declaration, A will retaliate by revealing embarrassing information about B. Therefore, B's best response is to follow A's action, i.e., to declare as well. Knowing this, A's best response is to declare in the first place, rather than risk retaliatory action from B. Therefore, the subgame-perfect equilibrium is for Teen A to Declare and for Teen B to follow A's action.

Consider the Game Between the Teens from the Previous Question