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Rationality and backward induction

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  • Ken Binmore

Abstract

This paper uses the Centipede Game to criticize formal arguments that have recently been offered for and against backward induction as a rationality principle. It is argued that the crucial issues concerning the interpretation of counterfactuals depend on contextual questions that are abstracted away in current formalisms. I have a text, it always is the same, And always has been, Since I learnt the game. Chaucer, The Pardoner's Tale

Suggested Citation

  • Ken Binmore, 1997. "Rationality and backward induction," Journal of Economic Methodology, Taylor & Francis Journals, vol. 4(1), pages 23-41.
    • Handle: RePEc:taf:jecmet:v:4:y:1997:i:1:p:23-41
    DOI: 10.1080/13501789700000002
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    References listed on IDEAS

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    1. Samet, Dov, 1996. "Hypothetical Knowledge and Games with Perfect Information," Games and Economic Behavior, Elsevier, vol. 17(2), pages 230-251, December.
    2. Ben-Porath, E., 1992. "Rationality, Nash Equilibrium and Backward Induction in Perfect Information Games," Papers 14-92, Tel Aviv - the Sackler Institute of Economic Studies.
    3. Cressman, R. & Schlag, K. H., 1998. "The Dynamic (In)Stability of Backwards Induction," Journal of Economic Theory, Elsevier, vol. 83(2), pages 260-285, December.
    4. Bonanno, G., 1994. "Knowledge, Rationality and Equilibrium in Extensive Games," Papers 94-06, California Davis - Institute of Governmental Affairs.
    5. Ken Binmore, 1994. "Game Theory and the Social Contract, Volume 1: Playing Fair," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262023636, April.
    6. Ben-Porath, Elchanan, 1992. "Rationality, Nash Equilibrium and Backward Induction in Perfect Information Games," Foerder Institute for Economic Research Working Papers 275567, Tel-Aviv University > Foerder Institute for Economic Research.
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    Citations

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    Cited by:

    1. Ponti, Giovanni, 2000. "Cycles of Learning in the Centipede Game," Games and Economic Behavior, Elsevier, vol. 30(1), pages 115-141, January.
    2. Pablo Brañas-Garza & Maria Paz Espinosa, 2011. "Unraveling Public Good Games," Games, MDPI, vol. 2(4), pages 1-18, November.
    3. Ramzi Mabsout, 2018. "The Backward Induction Controversy as a Metaphorical Problem," Economic Thought, World Economics Association, vol. 7(1), pages 24-49, March.
    4. Kristian Lindgren & Vilhelm Verendel, 2013. "Evolutionary Exploration of the Finitely Repeated Prisoners’ Dilemma—The Effect of Out-of-Equilibrium Play," Games, MDPI, vol. 4(1), pages 1-20, January.
    5. Lindgren, Kristian & Verendel, Vilhelm, 2013. "Evolutionary Exploration of the Finitely Repeated Prisoners' Dilemma--The Effect of Out-of-Equilibrium Play," MPRA Paper 43662, University Library of Munich, Germany.
    6. Yun Wang, 2015. "Belief and Higher-Order Belief in the Centipede Games: Theory and Experiment," Working Papers 2015-03-24, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    7. Ken Binmore, 2005. "Why the Distinction Between Knowledge and Belief Might Matter," Econ Journal Watch, Econ Journal Watch, vol. 2(1), pages 97-104, April.
    8. Graciela Kuechle, 2009. "What Happened To The Three‐Legged Centipede Game?," Journal of Economic Surveys, Wiley Blackwell, vol. 23(3), pages 562-585, July.
    9. Stauber, Ronald, 2017. "Irrationality and ambiguity in extensive games," Games and Economic Behavior, Elsevier, vol. 102(C), pages 409-432.
    10. Yun Wang, 2023. "Belief and higher‐order belief in the centipede games: An experimental investigation," Pacific Economic Review, Wiley Blackwell, vol. 28(1), pages 27-73, February.
    11. Giacomo Bonanno, 2018. "Behavior and deliberation in perfect-information games: Nash equilibrium and backward induction," International Journal of Game Theory, Springer;Game Theory Society, vol. 47(3), pages 1001-1032, September.
    12. Robert J. Aumann & Ken Binmore & Sudha R. Shenoy & Casey B. Mulligan, 2005. "Correspondence August 2005," Econ Journal Watch, Econ Journal Watch, vol. 2(2), pages 377-381, August.
    13. Roy Chen & Yan Chen & Yohanes E. Riyanto, 2021. "Best practices in replication: a case study of common information in coordination games," Experimental Economics, Springer;Economic Science Association, vol. 24(1), pages 2-30, March.

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