Does Backwards Induction Imply Subgame Perfection? / Ritzberger, Klaus; Alos-Ferrer, Carlos.

In: Games and Economic Behavior, Vol. 103, 05.2017, p. 19–29.

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Abstract

In finite games subgame perfect equilibria are precisely those that are obtained by a backwards induction procedure. In large extensive form games with perfect information this equivalence does not hold: Strategy combinations fulfilling the backwards induction criterion may not be subgame perfect in general. The full equivalence is restored only under additional (topological) assumptions. This equivalence is in the form of a one-shot deviation principle for large games, which requires lower semi-continuous preferences. As corollaries we obtain one-shot deviation principles for particular classes of games, when each player moves only finitely often or when preferences are representable by payoff functions that are continuous at infinity.
Original languageEnglish
Pages (from-to)19–29
Number of pages11
JournalGames and Economic Behavior
Volume103
Early online date16 Feb 2016
DOIs
Publication statusPublished - May 2017
This open access research output is licenced under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

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