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Statistical Backwards Induction: A Simple Method for Estimating Recursive Strategic Models

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  • Bas, Muhammet Ali
  • Signorino, Curtis S.
  • Walker, Robert W.

Abstract

We present a simple method for estimating regressions based on recursive extensive-form games. Our procedure, which can be implemented in most standard statistical packages, involves sequentially estimating standard logits (or probits) in a manner analogous to backwards induction. We demonstrate that the technique produces consistent parameter estimates and show how to calculate consistent standard errors. To illustrate the method, we replicate Leblang's (2003) study of speculative attacks by financial markets and government responses to these attacks.

Suggested Citation

  • Bas, Muhammet Ali & Signorino, Curtis S. & Walker, Robert W., 2008. "Statistical Backwards Induction: A Simple Method for Estimating Recursive Strategic Models," Political Analysis, Cambridge University Press, vol. 16(1), pages 21-40, January.
  • Handle: RePEc:cup:polals:v:16:y:2008:i:01:p:21-40_00
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    Citations

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    Cited by:

    1. Shiko Maruyama, 2009. "Estimating Sequential-move Games by a Recursive Conditioning Simulator," Discussion Papers 2009-01, School of Economics, The University of New South Wales.
    2. Muhammet A Bas & Curtis S Signorino & Taehee Whang, 2014. "Knowing one’s future preferences: A correlated agent model with Bayesian updating," Journal of Theoretical Politics, , vol. 26(1), pages 3-34, January.
    3. Maruyama, Shiko, 2014. "Estimation of finite sequential games," Journal of Econometrics, Elsevier, vol. 178(2), pages 716-726.
    4. Enzo Lenine, 2020. "Modelling Coalitions: From Concept Formation to Tailoring Empirical Explanations," Games, MDPI, vol. 11(4), pages 1-12, November.
    5. Muhammet A. Bas, 2012. "Measuring Uncertainty in International Relations: Heteroskedastic Strategic Models," Conflict Management and Peace Science, Peace Science Society (International), vol. 29(5), pages 490-520, November.
    6. B Glumac & Q Han & W Schaefer, 2018. "A negotiation decision model for public–private partnerships in brownfield redevelopment," Environment and Planning B, , vol. 45(1), pages 145-160, January.

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