An Extensive Game as a Guide for Solving a Normal Game*

Jacob Glazer and Ariel Rubinstein

Chapter 1 in Models of Bounded Rationality and Mechanism Design, 2016, pp 1-11 from World Scientific Publishing Co. Pte. Ltd.

Abstract: We show that for solvable games, the calculation of the strategies which survive iterative elimination of dominated strategies in normal games is equivalent to the calculation of the backward induction outcome of some extensive game. However, whereas the normal game form does not provide information on how to carry out the elimination, the corresponding extensive game does. As a by-product, we conclude that implementation using a subgame perfect equilibrium of an extensive game with perfect information is equivalent to implementation through a solution concept which we call guided iteratively elimination of dominated strategies which requires a uniform order of elimination.

Keywords: Bounded Rationality; Behavioral Economics; Implementation; Mechanism Design; Persuasion (search for similar items in EconPapers)
JEL-codes: E03 (search for similar items in EconPapers)
Date: 2016
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