Forward induction and public randomization

Faruk Gul, David G. Pearce

    Research output: Contribution to journalArticle

    Abstract

    We show that if the set of subgame perfect equilibrium payoffs of a stage game is convexified by the introduction of public random variables, then forward induction loses all its power as an argument for refining Nash equilibrium. We establish that our argument does not depend on a convenient choice of off-equilibrium path beliefs. Journal of Economic Literature Classification Number: C72.

    Original languageEnglish (US)
    Pages (from-to)43-64
    Number of pages22
    JournalJournal of Economic Theory
    Volume70
    Issue number1
    DOIs
    StatePublished - Jul 1996

    ASJC Scopus subject areas

    • Economics and Econometrics

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