Template-Type: ReDIF-Paper 1.0
Title: The Dynamic (In)Stability of Backwards Induction
Author-Name: R. Cressman, K.H. Schlag
Abstract: The analysis of the replicator dynamic in generic perfect
  	information games yields the following results. In the long run,
  	players play a Nash equilibrium provided that initially all
  	strategies are present. There is at most one ``stable'' component
  	(formally, an interior asymptotically stable set), play in this
  	component will follow the backwards induction path. Existence of
  	such a component is guaranteed in games with at most three
  	consecutive decision nodes. An example of a ``longer'' game is
  	provided where some trajectories starting close to the backwards
  	induction component lead away and never come back.
Keywords: perfect information, extensive-form game, Centipede Game,
  	backwards induction, replicator dynamics, interior asymptotic
  	stability.
Classification-JEL: C72; C79
Creation-Date: 1995-12
File-URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonsfb/bonsfb347.ps
File-Format: Application/Postscript
Handle: RePEc:bon:bonsfb:347