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Bagwell's paradox, forward induction and outside option games

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  • Ferreira, José Luis

Abstract

In Stackelberg-like games there is an advantage of moving first. However, Bagwell (1995) shows that this result may not hold if the second player can make only imperfect observations. We explore whether this paradox also holds when the advantage comes from forward induction arguments in the class of outside option games.

Suggested Citation

  • Ferreira, José Luis, 2010. "Bagwell's paradox, forward induction and outside option games," UC3M Working papers. Economics we1035, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:we1035
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    References listed on IDEAS

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    1. van Damme, Eric, 1989. "Stable equilibria and forward induction," Journal of Economic Theory, Elsevier, vol. 48(2), pages 476-496, August.
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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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