Forward induction and public randomization

Faruk Gul, David G. Pearce

Research output: Contribution to journalArticle

5 Scopus citations

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

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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