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The subgame perfect equilibrium in addition to the Nash equilibrium requires that the strategy also is a Nash equilibrium in every subgame of that game. This eliminates all non-credible threats , that is, strategies that contain non-rational moves in order to make the counter-player change their strategy.
A Nash equilibrium is a strategy profile (a strategy profile specifies a strategy for every player, e.g. in the above prisoners' dilemma game (cooperate, defect) specifies that prisoner 1 plays cooperate and prisoner 2 plays defect) in which every strategy played by every agent (agent i) is a best response to every other strategy played by all the other opponents (agents j for every j≠i) .
The mixed strategy Nash equilibrium is inefficient: the players will miscoordinate with probability 13/25, leaving each player with an expected return of 6/5 (less than the payoff of 2 from each's less favored pure strategy equilibrium). It remains unclear how expectations would form that would result in a particular equilibrium being played out.
The solutions are normally based on the concept of Nash equilibrium, and these solutions are reached by using methods listed in Solution concept. Most solutions used in non-cooperative game are refinements developed from Nash equilibrium , including the minimax mixed-strategy proved by John von Neumann .
In game theory, the best response is the strategy (or strategies) which produces the most favorable outcome for a player, taking other players' strategies as given. [1] The concept of a best response is central to John Nash's best-known contribution, the Nash equilibrium, the point at which each player in a game has selected the best response (or one of the best responses) to the other players ...
The Lemke–Howson algorithm is an algorithm that computes a Nash equilibrium of a bimatrix game, named after its inventors, Carlton E. Lemke and J. T. Howson. [1] It is said to be "the best known among the combinatorial algorithms for finding a Nash equilibrium", [2] although more recently the Porter-Nudelman-Shoham algorithm [3] has outperformed on a number of benchmarks.
Different concepts of equilibrium can be used to model the selfish behavior of the agents, among which the most common is the Nash equilibrium. Different flavors of Nash equilibrium lead to variations of the notion of Price of Anarchy as Pure Price of Anarchy (for deterministic equilibria), Mixed Price of Anarchy (for randomized equilibria ...
A strategy profile is a subgame perfect equilibrium if it represents a Nash equilibrium of every subgame of the original game. Informally, this means that at any point in the game, the players' behavior from that point onward should represent a Nash equilibrium of the continuation game (i.e. of the subgame), no matter what happened before.