Backward Induction Reasoning beyond Backward Induction

Catonini, Emiliano; Penta, Antonio

doi:10.1257/mic.20240361

Abstract

Backward Induction 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 鈥榖ackward induction reasoning鈥� is not clear in these settings, and we lack a way to capture the essence of Backward Induction without assuming equilibrium. We introduce Backwards Rationalizability, a non-equilibrium solution concept for incompelte information games which we argue distills the logic of backward induction reasoning, and show several of its properties, and discuss a few applications, including a new version of Lipnowski and Sadler's (2019) peer-confirming equilibrium.

蝌蚪网

蝌蚪网 Journal:
Microeconomics