We are indebted to Adam Brandenburger, John Nachbar, and Marciano Siniscalchi for many helpful conversations. Jeff Ely and three referees provided important input—much thanks. We also thank Ethan Bueno de Mesquita, Alfredo Di Tillio, Alejandro Manelli, Elena Manzoni, Andres Perea, Larry Samuelson, Adam Szeidl, and seminar participants at Bocconi University, Boston University, Maastricht University, New York University, Northwestern University, Toulouse, UC Berkeley, the 2009 Southwest Economic Theory Conference, the 2009 North American Econometric Society Meetings, the Kansas Economic Theory Conference, the 2009 SAET conference, and the 2009 European Econometric Society Meetings for important input. Battigalli thanks MIUR and Bocconi University. Friedenberg thanks the W.P. Carey School of Business and the Olin Business School.
Forward induction reasoning revisited
Article first published online: 10 JAN 2012
Copyright © 2012 Pierpaolo Battigalli and Amanda Friedenberg
Volume 7, Issue 1, pages 57–98, January 2012
How to Cite
Battigalli, P. and Friedenberg, A. (2012), Forward induction reasoning revisited. Theoretical Economics, 7: 57–98. doi: 10.3982/TE598
- Issue published online: 10 JAN 2012
- Article first published online: 10 JAN 2012
- Submitted 2009-7-30. Final version accepted 2010-12-4. Available online 2010-12-7.
- Epistemic game theory;
- forward induction;
- extensive form best response set;
- directed rationalizability
Battigalli and Siniscalchi (2002) formalize the idea of forward induction reasoning as “rationality and common strong belief of rationality” (RCSBR). Here we study the behavioral implications of RCSBR across all type structures. Formally, we show that RCSBR is characterized by a solution concept we call extensive form best response sets (EFBRS's). It turns out that the EFBRS concept is equivalent to a concept already proposed in the literature, namely directed rationalizability (Battigalli and Siniscalchi 2003). We conclude by applying the EFBRS concept to games of interest.