SFB 303 Discussion Paper No. B - 331

Author: Balkenborg, Dieter, and Eyal Winter
Title: A Necessary and Sufficient Epistemic Condition for Playing Backward Induction
Abstract: In an epistemic framework due to Aumann we characterize the condition on the rationality of the players that is both necessary and sufficient to imply backward induction in perfect information games in agent form. This condition requires each player to know that the players are rational at later, but not at previous decision nodes.
Keywords: backward induction, common knowledge, epistemic logic
JEL-Classification-Number: C72
Creation-Date: October 1995
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