Theoretical Economics, Volume 7, Number 1 (January 2012)

Theoretical Economics 7 (2012), 57–98

Forward induction reasoning revisited

Pierpaolo Battigalli, Amanda Friedenberg


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. (See Battigalli and Siniscalchi 2003.) We conclude by applying the EFBRS concept to games of interest.

Keywords: Epistemic game theory, forward induction, extensive form best response set, directed rationalizability

JEL classification: C72

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