A subgame perfect Nash equilibrium is a concept in game theory that describes a solution to a dynamic or sequential game where players make decisions at different points in time, and each player's decision takes into account the actions and responses of other players both before and after their own decision. Subgame perfect Nash equilibria are used to analyze games with sequential moves, such as extensive-form games.
Backward induction is a method used in game theory to analyze sequential games, especially those represented in extensive form. It involves working backward from the end of the game tree to determine the optimal strategies and outcomes for each player. This technique is used to find subgame perfect Nash equilibria, which represent credible strategies that players would follow at each stage of the game.
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