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What is the topic of Subgame perfect equilibrium all about?
Subgame perfect equilibrium is studied under the game theory in economics. It is a sort of refined process as based on the Nash’s equilibrium that is seen in the concept of dynamic games. In this theory a strategy profile will be considered as a Subgame perfect equilibrium only when it depicts Nash equilibrium related to every Subgame that is a part of the original game itself.
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Some important information about Subgame perfect equilibrium
In actual sense the theory of Subgame perfect equilibrium states that if all the players of a particular game decided to play any game that was smaller than the original game and it included just one part of the larger game, then in this case the behavior demonstrated by such players would actually represent the Nash equilibrium of the smaller game they are currently involved in. You can also say that in the case of all types of extensive games that are finite in nature there will arise a situation leading to Subgame perfect equilibrium.
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