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On Forward Induction and Evolutionary and Strategic Stability

  • Hauk, Esther
  • Hurkens, Sjaak

We analyze which normal form solution concepts capture the notion of forward induction, as defined by van Damme (JET, 1989) in the class of generic two player normal form games preceded by an outside option. We find that none of the known strategic stability concepts (including Mertens stable sets and hyperstable sets) captures this form of forward induction. On the other hand, we show that the evolutionary concept of EES set (Swinkels, JET, 1992) is always consistent with forward induction.

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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 106 (2002)
Issue (Month): 1 (September)
Pages: 66-90

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Handle: RePEc:eee:jetheo:v:106:y:2002:i:1:p:66-90
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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  1. van Damme, E.E.C., 1989. "Stable equilibria and forward induction," Other publications TiSEM bd598a8f-f017-4cab-a9ed-8, Tilburg University, School of Economics and Management.
  2. Binmore, Ken & Samuelson, Larry, 1999. "Evolutionary Drift and Equilibrium Selection," Review of Economic Studies, Wiley Blackwell, vol. 66(2), pages 363-93, April.
  3. Mailath, G.J. & Samuelson, L. & Swinkels, J., 1990. "Extensive Form Reasoning In Normal Form Games," Papers 1-90-1, Pennsylvania State - Department of Economics.
  4. Gul, Faruk & Pearce, David G., 1996. "Forward Induction and Public Randomization," Journal of Economic Theory, Elsevier, vol. 70(1), pages 43-64, July.
  5. Basu, K. & Weibull, J., 1990. "Strategy Subsets Closed Under Rational Behavior," Papers 62, Princeton, Woodrow Wilson School - Discussion Paper.
  6. Binmore, K. & Samuelson, L., 1997. "Evolutionary Drift and Equilibrium Selection," Working papers 9729r, Wisconsin Madison - Social Systems.
  7. Kohlberg, Elon & Mertens, Jean-Francois, 1986. "On the Strategic Stability of Equilibria," Econometrica, Econometric Society, vol. 54(5), pages 1003-37, September.
  8. Matsui, Akihiko, 1992. "Best response dynamics and socially stable strategies," Journal of Economic Theory, Elsevier, vol. 57(2), pages 343-362, August.
  9. K. Ritzberger & J. Weibull, 2010. "Evolutionary Selection in Normal-Form Games," Levine's Working Paper Archive 452, David K. Levine.
  10. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
  11. Govindan, Srihari & Robson, Arthur J., 1998. "Forward Induction, Public Randomization, and Admissibility," Journal of Economic Theory, Elsevier, vol. 82(2), pages 451-457, October.
  12. Robert Wilson & Srihari Govindan, 1997. "Uniqueness of the index for Nash equilibria of two-player games," Economic Theory, Springer, vol. 10(3), pages 541-549.
  13. Govindan Srihari, 1995. "Stability and the Chain Store Paradox," Journal of Economic Theory, Elsevier, vol. 66(2), pages 536-547, August.
  14. Swinkels, J., 1991. "Evolutionary Stability with Equilibrium Entrants," Papers 9, Stanford - Institute for Thoretical Economics.
  15. Ritzberger, Klaus, 1994. "The Theory of Normal Form Games form the Differentiable Viewpoint," International Journal of Game Theory, Springer, vol. 23(3), pages 207-36.
  16. Swinkels, Jeroen M., 1992. "Evolution and strategic stability: From maynard smith to kohlberg and mertens," Journal of Economic Theory, Elsevier, vol. 57(2), pages 333-342, August.
  17. Hillas, John, 1990. "On the Definition of the Strategic Stability of Equilibria," Econometrica, Econometric Society, vol. 58(6), pages 1365-90, November.
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