What is the difference between subgame perfect equilibrium and Nash equilibrium?

The key difference between subgame perfect equilibrium and Nash equilibrium is that subgame perfect equilibrium require that all threats are credible. Consequently, the study of subgame perfect equilibrium is the study of credible threats. But a Nash equilibrium may or may not be a subgame perfect equilibrium.

Is subgame perfect sequential equilibrium?

Sequential equilibrium is a further refinement of subgame perfect equilibrium and even perfect Bayesian equilibrium. It is itself refined by extensive-form trembling hand perfect equilibrium and proper equilibrium. A refinement of sequential equilibrium that guarantees admissibility is quasi-perfect equilibrium.

What is subgame perfect equilibrium in game theory?

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.

What is a subgame in game theory?

In game theory, a subgame is any part (a subset) of a game that meets the following criteria (the following terms allude to a game described in extensive form): It has a single initial node that is the only member of that node’s information set (i.e. the initial node is in a singleton information set).

What is a sequential game in economics?

a sequential game involves: a list of players. for each player, a set of actions at each stage. each player’s information at each stage. each player’s preferences over all possible combination of actions = payoffs.

What is a weak perfect Bayesian equilibrium?

A weak perfect Bayesian equilibrium for this game is that Player 1 chooses L, Player 2 believes that Player 1 chooses L with probability 1, and Player 2 chooses Ld. Note that this equilibrium also satisfies requirement 4 because there are no off\%the\%equilibrium path information sets, so it is also a SPBE.

What is the difference between sequential and simultaneous game?

In sequential games, players observe what rivals have done in the past and there is a specific order of play. However, in simultaneous games, all players select strategies without observing the choices of their rivals and players choose at the exact same time.