A theory of forward induction in finitely repeated games

Nabil Al-Najjar*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

A forward induction solution for finitely repeated games with complete information is developed. This notion is motivated in terms of its implications on the way deviations affect the opponents' expectations about the future behavior of the deviating player. We argue that the inability of the notion of perfect equilibrium to take account of forward induction is a key factor responsible for a number of difficulties encountered in the use of perfect equilibria in repeated games. It is then shown that the solution proposed in this paper remedies some of these problems in the study of three important classes of repeated games: (i) finitely repeated coordination games; (ii) repeated games where one long-term player plays a sequence of short-term players; (iii) repeated battle of the sexes games.

Original languageEnglish (US)
Pages (from-to)173-193
Number of pages21
JournalTheory and Decision
Volume38
Issue number2
DOIs
StatePublished - Mar 1 1995

Keywords

  • finitely repeated games
  • forward inductions

ASJC Scopus subject areas

  • Social Sciences (miscellaneous)
  • Economics and Econometrics

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