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Strong Forward Induction

Author

Listed:
  • Zheng Bingyong

    (School of Economics, Shanghai University of Finance and Economics, 777 Guoding Rd., Shanghai, China200433)

Abstract

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.

Suggested Citation

  • Zheng Bingyong, 2017. "Strong Forward Induction," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 17(2), pages 1-16, June.
    • Handle: RePEc:bpj:bejtec:v:17:y:2017:i:2:p:16:n:7
    DOI: 10.1515/bejte-2016-0067
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    References listed on IDEAS

    as
    1. Pearce, David G, 1984. "Rationalizable Strategic Behavior and the Problem of Perfection," Econometrica, Econometric Society, vol. 52(4), pages 1029-1050, July.
    2. Battigalli, Pierpaolo & Siniscalchi, Marciano, 2007. "Interactive epistemology in games with payoff uncertainty," Research in Economics, Elsevier, vol. 61(4), pages 165-184, December.
    3. Reny, Philip J, 1992. "Backward Induction, Normal Form Perfection and Explicable Equilibria," Econometrica, Econometric Society, vol. 60(3), pages 627-649, May.
    4. Banks, Jeffrey S & Sobel, Joel, 1987. "Equilibrium Selection in Signaling Games," Econometrica, Econometric Society, vol. 55(3), pages 647-661, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    forward induction; belief; equilibrium refinement;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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