American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Backward Induction Reasoning beyond Backward Induction
American Economic Journal: Microeconomics
(pp. 30–58)
Abstract
Backward induction (BI) is only defined for perfect information games, but its logic is also invoked in many concepts for imperfect or incomplete information games. Yet, the meaning of BI reasoning is not clear in these settings, and we lack a way to capture the essence of BI without assuming equilibrium. We introduce backward rationalizability, a nonequilibrium solution concept for incomplete information games, which we argue distills the logic of BI reasoning. We show several of its properties and discuss a few applications, including a new version of Lipnowski and Sadler's (2019) peer-confirming equilibrium.Citation
Catonini, Emiliano, and Antonio Penta. 2026. "Backward Induction Reasoning beyond Backward Induction." American Economic Journal: Microeconomics 18 (1): 30–58. DOI: 10.1257/mic.20240361Additional Materials
JEL Classification
- C72 Noncooperative Games
- C73 Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness