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The logic of backward induction

Itai Arieli and Robert Aumann

Journal of Economic Theory, 2015, vol. 159, issue PA, 443-464

Abstract: Call a perfect information (PI) game simple if each player moves just once. Call a player rational if he never takes an action while believing, with probability 1, that a different action would yield him a higher payoff. Using syntactic logic, we show that an outcome of a simple PI game is consistent with common strong belief of rationality iff it is a backward induction outcome. The result also applies to general PI games in which a player's agents act independently, rendering forward inferences invalid.

Keywords: Backward induction; Common strong belief; Perfect information; Syntactic interactive epistemology; Strong belief (search for similar items in EconPapers)
JEL-codes: C72 D83 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Working Paper: The Logic of Backward Induction (2013) Downloads
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DOI: 10.1016/j.jet.2015.07.004

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