Complexity Explorer Santa Fe Institute

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Game Theory II- Dynamic Games

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3.2 Sub-Game Perfect Equilibria » Quiz Solution

Lesson 3 : What is the player 1's (P1) subgame perfect equilibrium strategy in the game above?

(a) A

(b)  B

(c) C

(d) D

 First, figure out what player 2 would play for each of player 1's possible actions. Then, pick the strategy for player 1 that gives the highest payout conditional on player 2 best responding to whatever player 1 chooses.