Subgame Perfect Equilibrium
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High Quality Content by WIKIPEDIA articles! In game theory, a subgame perfect equilibrium (or subgame perfect Nash equilibrium) is a refinement of a Nash equilibrium used in dynamic games. A strategy profile is a subgame perfect equilibrium if it represents a Nash equilibrium of every subgame of the original game. More informally, this means that if (1) the players played any smaller game that consisted of only one part of the larger game and (2) their behavior represents a Nash equilibrium of that smaller game, then their behavior is a subgame perfect equilibrium of the larger game. A common…mehr

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High Quality Content by WIKIPEDIA articles! In game theory, a subgame perfect equilibrium (or subgame perfect Nash equilibrium) is a refinement of a Nash equilibrium used in dynamic games. A strategy profile is a subgame perfect equilibrium if it represents a Nash equilibrium of every subgame of the original game. More informally, this means that if (1) the players played any smaller game that consisted of only one part of the larger game and (2) their behavior represents a Nash equilibrium of that smaller game, then their behavior is a subgame perfect equilibrium of the larger game. A common method for determining subgame perfect equilibria in the case of a finite game is backward induction. Here one first considers the last actions of the game and determines which actions the final mover should take in each possible circumstance to maximize his/her utility.