Explain Reinhard Selten's concept of subgame perfect equilibrium.
Subgame perfect equilibrium is a refinement of Nash equilibrium designed for sequential games – games played over time. It requires that a player's strategy must constitute a Nash equilibrium not only in the entire game but also in every possible subgame. A subgame is essentially a smaller game that begins at any point where a player makes a decision and all subsequent decisions are determined. This ensures that the strategies are credible at every stage, eliminating non-credible threats and promises.
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