Epistemic foundation of the backward induction paradox

B-Tier
Journal: Games and Economic Behavior
Year: 2023
Volume: 141
Issue: C
Pages: 503-514

Authors (2)

Asheim, Geir B. (Universitetet i Oslo) Brunnschweiler, Thomas (not in RePEc)

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

After having observed a deviation from backward induction, a player might deem the opponent prone to deviate from backward induction again, making it worthwhile to deviate themself. Such reaction might make the deviation by the opponent worthwhile in the first place—which is the backward induction paradox. This argument against backward induction cannot be made in games where all players choose only once on each path. While strategic-form perfect equilibrium yields backward induction in games where players choose only once on each path but not necessarily otherwise, no existing non-equilibrium concept captures the backward induction paradox by having these properties. To provide such a concept, we define and epistemically characterize the concept of independently permissible strategies. Since beliefs are modeled by non-Archimedean probabilities, meaning that some opponent choices might be assigned subjective probability zero without being deemed subjectively impossible, special attention is paid to the formalization of stochastically independent beliefs.

Technical Details

RePEc Handle
repec:eee:gamebe:v:141:y:2023:i:c:p:503-514
Journal Field
Theory
Author Count
2
Added to Database
2026-01-24