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Backward Induction versus Forward Induction Reasoning

Author

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  • Andres Perea

    (Department of Quantitative Economics, Maastricht University, P.O. Box 616, 6200 MD Maastricht, The Netherlands)

Abstract

In this paper we want to shed some light on what we mean by backward induction and forward induction reasoning in dynamic games. To that purpose, we take the concepts of common belief in future rationality (Perea [1]) and extensive form rationalizability (Pearce [2], Battigalli [3], Battigalli and Siniscalchi [4]) as possible representatives for backward induction and forward induction reasoning. We compare both concepts on a conceptual, epistemic and an algorithm level, thereby highlighting some of the crucial differences between backward and forward induction reasoning in dynamic games.

Suggested Citation

  • Andres Perea, 2010. "Backward Induction versus Forward Induction Reasoning," Games, MDPI, vol. 1(3), pages 1-21, July.
    • Handle: RePEc:gam:jgames:v:1:y:2010:i:3:p:168-188:d:8864
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    References listed on IDEAS

    as
    1. Ben-Porath, E., 1992. "Rationality, Nash Equilibrium and Backward Induction in Perfect Information Games," Papers 14-92, Tel Aviv - the Sackler Institute of Economic Studies.
    2. Elchanan Ben-Porath, 1997. "Rationality, Nash Equilibrium and Backwards Induction in Perfect-Information Games," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(1), pages 23-46.
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    Cited by:

    1. Giacomo Bonanno, 2022. "Rational Play in Extensive-Form Games," Games, MDPI, vol. 13(6), pages 1-20, October.
    2. Jean-Pierre Corriou, 2021. "Dynamic Optimization," Springer Optimization and Its Applications, in: Numerical Methods and Optimization, chapter 0, pages 653-708, Springer.
    3. Bonanno, Giacomo, 2014. "A doxastic behavioral characterization of generalized backward induction," Games and Economic Behavior, Elsevier, vol. 88(C), pages 221-241.
    4. Barbot, Cristina & D'Alfonso, Tiziana, 2014. "Why do contracts between airlines and airports fail?," Research in Transportation Economics, Elsevier, vol. 45(C), pages 34-41.
    5. Perea, Andrés, 2014. "Belief in the opponentsʼ future rationality," Games and Economic Behavior, Elsevier, vol. 83(C), pages 231-254.
    6. Giacomo Bonanno, 2021. "Rational play in games: A behavioral approach," Working Papers 344, University of California, Davis, Department of Economics.

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