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Perfect forward induction

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  • Yang, Chih-Chun

Abstract

Suppose that every player in an extensive-form game incorporates perfection in conducting forward induction reasoning. To capture this idea, we propose the notion of “perfect extensive-form rationalizability” (PEFR). In every simultaneous move game, PEFR coincides with Brandenburger’s (1992) permissibility, which can be obtained by Dekel and Fudenberg’s (1990) procedure. Although PEFR is closely relate to iterated admissibility and other cautious reasoning processes, we show that there is no relationship in general.

Suggested Citation

  • Yang, Chih-Chun, 2018. "Perfect forward induction," Economics Letters, Elsevier, vol. 170(C), pages 113-116.
    • Handle: RePEc:eee:ecolet:v:170:y:2018:i:c:p:113-116
    DOI: 10.1016/j.econlet.2018.06.008
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    References listed on IDEAS

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    More about this item

    Keywords

    Forward induction; Perfect; Extensive-form rationalizability; Iterated admissibility; Permissibility;
    All these keywords.

    JEL classification:

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

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