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An epistemic characterization of generalized backward induction

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  • Giacomo Bonanno

    (Department of Economics, University of California Davis)

Abstract

We investigate the extension of backward-induction to von Neumann extensive games (where information sets have a synchronous structure) and provide an epistemic characterization of it. Extensions of the idea of backward-induction were proposed by Penta (2009) and later by Perea (2013), who also provided an epistemic characterization in terms of the notion of common belief in future rationality. The epistemic characterization we propose, although differently formulated, is conceptually the same as Perea's and so is the generalization of backward induction. The novelty of this contribution lies in the epistemic models that we use, which are dynamic, behavioral models where strategies play no role and the only beliefs that are specified are the actual beliefs of the players at the time of choice. Thus our analysis is free of (objective or subjective) counterfactuals.

Suggested Citation

  • Giacomo Bonanno, 2013. "An epistemic characterization of generalized backward induction," Working Papers 60, University of California, Davis, Department of Economics.
    • Handle: RePEc:cda:wpaper:60
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    References listed on IDEAS

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    12. Perea,Andrés, 2012. "Epistemic Game Theory," Cambridge Books, Cambridge University Press, number 9781107008915.
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    More about this item

    Keywords

    Dynamic game; imperfect information; backward induction; belief; rationality; behavioral model;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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