7. A Review Example: SPNE in Finite Games with Imperfect Information (Game Theory Playlist 7)

[@adrianamacamo8541]

Thank you !! Best regards from Mozambique !!!

[@PersianQuant]

I had a question from the tree: why would player 2 have ever the incentive to play A, while she can always play B and get the payoff 6, which is more than her payoff when she plays A?

[@stevelong8416]

Applying your reasoning, Player 1 should always play Y in that case.

[@praneshsaisridhar2823]

We can only anticipate that either of the 2 NE (YA and XB) in the simultaneous subgame is possible. This means that the game could settle into either of these two equilibria. We can make no further predictions about why a player might have an incentive to play a given strategy and thereby rationalize one equilibrium. To answer your question, player 2 might have an incentive to play A if she anticipates that player 1 might play Y (according to the Nash equilibrium strategy profile YA), which explains this nash equilibrium.