📚 Learning Guide
Game Theory Strategies
easy

In the context of Game Theory, which of the following best describes a subgame perfect equilibrium?

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Choose the Best Answer

A

A strategy profile that is optimal for every subgame of the original game

B

A strategy that only considers the final outcome of the game

C

A strategy that is optimal only in the first stage of the game

D

A strategy that disregards future consequences

Understanding the Answer

Let's break down why this is correct

Answer

A subgame perfect equilibrium is a concept in game theory that describes a situation where players make the best possible decisions at every point in the game, not just at the beginning. This means that even if the game changes or a player has to make a decision later on, they will still choose the best strategy based on what has happened so far. For example, imagine two players in a game where they take turns to choose actions. If at any turn, a player can choose a strategy that will lead to the best outcome for them, even considering future moves, then they are following a subgame perfect equilibrium. This concept helps ensure that players are acting rationally throughout the entire game, making it a key idea in understanding strategic interactions.

Detailed Explanation

A subgame perfect equilibrium means that the strategy works well in every part of the game. Other options are incorrect because This answer suggests that a strategy only looks at the final result; This option says a strategy is only good at the start.

Key Concepts

subgame perfection
Topic

Game Theory Strategies

Difficulty

easy level question

Cognitive Level

understand

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