The Refined Best Reply Correspondence and Backward Induction

Dieter Balkenborg, Christoph Kuzmics and Josef Hofbauer

German Economic Review, 2019, vol. 20, issue 1, 52-66

Abstract: Fixed points of the (most) refined best reply correspondence, introduced in Balkenborg et al. (2013), in the agent normal form of extensive form games with perfect recall have a remarkable property. They induce fixed points of the same correspondence in the agent normal form of every subgame. Furthermore, in a well-defined sense, fixed points of this correspondence refine even trembling hand perfect equilibria, while, on the other hand, reasonable equilibria that are not weak perfect Bayesian equilibria are fixed points of this correspondence.

Keywords: Subgame perfection; Nash equilibrium refinements; backward induction; sequential rationality (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1111/geer.12136

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