Subgame perfect equilibrium is a refinement of Nash equilibrium used in dynamic games, where players' strategies constitute a Nash equilibrium in every subgame of the original game. This concept ensures that players' strategies are optimal not just overall but also at every possible point in the game, taking into account any potential future moves. It highlights the importance of credibility in strategies and emphasizes that players will not make non-optimal choices even when faced with different scenarios.
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