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What is Subgame Perfect Equilibrium?
A subgame perfect equilibrium is also called perfect Nash equilibrium. It is basically a refinement of Nash equilibrium which is used in the dynamic games. Strategy profile is considered subgame perfect equilibrium if there is a representation of Nash equilibrium of all subgame of original game. It means if players played a smaller game which consisted of just one part of a larger game; the behaviour would suggest it to be Nash equilibrium. Every extensive game which is finite has subgame perfect equilibrium.
A common approach is used to determine subgame perfect equilibria in cases where finite game has backward induction. In this one considers last actions of a game first and then it determines final mover’s action in each circumstance for maximizing the utility. One takes into account that last player will do the needful while considering last action and then again choosing that will maximize player’s utility. Our Subgame perfect equilibria homework help experts supply all the necessary materials.
This is a continuous process until first move is made in the game. The remaining strategies are set of subgame perfect equilibria for extensive finite horizon games. Backward application is not applicable to games of incomplete or imperfect information as it entails cutting information sets of non-singleton.
Finding a Subgame Perfect Equilibria
- Selten proved a game that can be divided in sub games contain a sub set of each available choices that are there in main game and will have Nash equilibrium perfect strategy. Subgame perfection is used only when games have complete information. It can also be used for complete games with extensive form but with imperfect information. Know more about this from our Subgame perfect equilibria assignment help.
The Nash equilibrium’s perfect subgame is deduced by a backward induction from various outcomes of a game, which eliminates branches where a player makes a not credible move. Tic-Tac-Toe is a game where backward induction is a well-known solution.
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