1. **Stating the problem:** We need to identify the type of strategy the older ISP employed when it threatened a price match guarantee (with an additional 5% off) to deter the startup from maintaining its lower price, even though the ISP never actually implemented the price match. 2. **Understanding the strategies:** - **Grim trigger:** A strategy where a player cooperates until the opponent defects once, then punishes forever. - **Tit-for-tat:** A strategy where a player starts cooperating and then mimics the opponent's previous action. - **Trembling hand trigger:** A strategy that allows for occasional mistakes (trembles) and punishes only if defections are intentional. - **Subgame perfection:** A refinement of Nash equilibrium where strategies constitute a Nash equilibrium in every subgame, ensuring credible threats. 3. **Analyzing the ISP's behavior:** - The older ISP threatened a price match guarantee with an extra discount to deter the startup from lowering prices. - The threat was credible enough to make the startup revert to its old pricing. - However, the ISP never actually implemented the price match, indicating the threat was a strategic move to influence behavior. 4. **Conclusion:** This is an example of a **credible threat** that influences the opponent's behavior without actual execution, which aligns with the concept of **subgame perfection** where threats must be credible and rational in every subgame. **Final answer:** The older ISP employed a **subgame perfection** strategy.