Strong Forward Induction
Bingyong Zheng ()
The B.E. Journal of Theoretical Economics, 2017, vol. 17, issue 2, 16
Forward induction, as defined by Govindan and Wilson (2009. “On Forward Induction.” Econometrica 77:1–28), places a local dominance condition on off-equilibrium beliefs that restricts relevant strategy profiles for an equilibrium outcome to be infinitely more likely than profiles that include irrelevant strategies. Meanwhile, it places no global dominance restrictions and thus leaves open the possibility that a dominated strategy is deemed more likely than strategies dominating it. This paper defines strong forward induction, which improves upon forward induction. We also develop a solution concept called strong forward induction equilibrium that is obtained from iterative application of the strong forward induction criterion.
Keywords: forward induction; belief; equilibrium refinement (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
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