Subgame perfect is a refinement of Nash equilibrium used in extensive-form games, where players make sequential decisions. An equilibrium is subgame perfect if the players’ strategies constitute a Nash equilibrium in every subgame of the original game. This concept ensures that strategies remain optimal at every stage of the game, even if previous moves deviated from the equilibrium path. It rules out non-credible threats and promises, providing a more robust prediction of rational behavior.
Context
In blockchain protocol design, particularly for long-running processes like consensus mechanisms or dispute resolution systems, achieving subgame perfection is crucial for long-term stability. It ensures that participants have no incentive to deviate from honest behavior at any point in the protocol’s execution, even after certain events have transpired. This property helps prevent opportunistic behavior and strengthens the economic security of decentralized systems. Researchers apply this game-theoretic concept to design protocols that are resilient to manipulation over time.
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