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Markov Perfect Equilibrium / Markov Perfect Equilibria
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Definition of Markov Perfect Equilibrium / Markov Perfect Equilibria: A characteristic of some Nash equilibria. "A Markov perfect equilibrium (MPE) is a profile of Markov strategies that yields a Nash equilibrium in every proper subgame." A Markov strategy is one that does not depend at all on variables that are functions of the history of the game except those that affect payoffs.

A tiny change to payoffs can discontinuously change the set of Markov perfect equilibria, because a state variable with a tiny effect on payoffs can be part of a Markov perfect strategy, but if its effect drops to zero, it cannot be included in a strategy; that is, such a change makes many strategies disappear from the set of Markov perfect strategies. (Econterms)

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