9. A Review Example: Nash versus Subgame Perfect Nash (Game Theory Playlist 6)

In this episode we continue working on the extensive form game we introduce in episode 7 and discuss the differences between Nash and Subgame Perfect Nash equilibria.
It's crucial to watch lecture videos in the proper order to ensure effective learning. This is because the concepts in each video build upon those introduced in previous videos. To help you with this, I recommend visiting my website, www.selcukozyurt.com, for a recommended course outline.

[@emptyxnes]

Hello Dr. Ozyurt, Thank you. Your explanations are clearing up a lot of questions I had. In regards to credible threat, is there a way that player 2 can guarantee that he'll pick R in order to get a payoff of 1?

[@daniellan3385]

Hi Emo Xnes, maybe I can help. I don't know if you have finished the later videos or not, but this has something to do with Player 1's belief about Player 2's action. In this specific game, under this solution concept (SPNE), the answer is no. If there's other information, or players have different believes (e.g. Player2 get some outside enforcement and this becomes a common knowledge), or under a new solution concept, what you have stated might be possible then.

[@emptyxnes]

@@daniellan3385 Thanks. So there's a Bayesian idea, about forming beliefs of what a rational player would do given the information. Like the prisoners dilemma, to cooperate is the outcome unless there's an enforcer that makes you not want to cooperate. One then has to have the belief that the enforcer's threats are credible.