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Backward Induction Reasoning beyond Backward Induction

Author

Listed:
  • Emiliano Catonini
  • Antonio Penta

Abstract

Backward induction (BI) is only defined for perfect information games, but its logic is also invoked in many concepts for imperfect or incomplete information games. Yet, the meaning of BI reasoning is not clear in these settings, and we lack a way to capture the essence of BI without assuming equilibrium. We introduce backward rationalizability, a nonequilibrium solution concept for incomplete information games, which we argue distills the logic of BI reasoning. We show several of its properties and discuss a few applications, including a new version of Lipnowski and Sadler's (2019) peer-confirming equilibrium.

Suggested Citation

  • Emiliano Catonini & Antonio Penta, 2026. "Backward Induction Reasoning beyond Backward Induction," American Economic Journal: Microeconomics, American Economic Association, vol. 18(1), pages 30-58, February.
    • Handle: RePEc:aea:aejmic:v:18:y:2026:i:1:p:30-58
    DOI: 10.1257/mic.20240361
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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