Answer:
That is correct
Step-by-step explanation:
A subgame perfect equilibrium is a Nash equilibrium in which all players are playing their best responses to each other's strategies, even in subgames of the overall game. This means that players are not making any threats or promises that they are not willing to carry out.
In contrast, a Nash equilibrium that is not subgame perfect may involve players making threats or promises that they are not willing to carry out. This is because the players may only be considering the current game state, and not the future subgames that could result from their actions.
Because subgame perfect equilibria are more credible, they are more likely to be played by rational players. This is because players know that if they deviate from a subgame perfect equilibrium, the other players will likely punish them by defecting from the equilibrium themselves.
For example, consider the game of chicken. In this game, two players are driving towards each other head-on. If both players swerve, they will both be safe. However, if one player swerves and the other does not, the player who swerves will be injured.
There are two Nash equilibria in this game. In one equilibrium, both players swerve. In the other equilibrium, one player swerves and the other does not. The subgame perfect equilibrium is the first equilibrium, in which both players swerve. This is because if one player defects from the equilibrium by not swerving, the other player will likely not swerve either, and both players will be injured.
Therefore, the subgame perfect equilibrium is a more credible focal point in this game. This is because it is more likely to be played by rational players.