The street–garden game analyzed in Section 4 of this
chapter has a 16-by-4-by-2 game table when the sequential-move version of the
game is expressed in strategic form, as in. There are many Nash equilibria to
be found in this table.
(a) Use best-response analysis to find all of the Nash
equilibria in the in.
(b) Identify the subgame-perfect equilibrium from among
your set of all Nash equilibria. Other equilibrium outcomes look identical to
the subgame-perfect one—they entail the same payoffs for each of the three
players—but they arise after different combinations of strategies. Explain how
this can happen. Describe the credibility problems that arise in the non subgame-perfect