Working Paper

King of the Hill: Giving Backward Induction its Best Shot

Martin Dufwenberg, Matt Van Essen
CESifo, Munich, 2016

CESifo Working Paper No. 6169

We study a class of deceptively similar games, which however have different player sets and predictions that vary with their cardinality. The economic, biological, political, and psychological applications are many. The game-theoretic principles involved are compelling as predictions rely on weaker and less controversial epistemic foundations than needed to justify backward inductions more generally. Is the account empirically relevant? We design and report results from a relevant experiment.

CESifo Category
Behavioural Economics
Empirical and Theoretical Methods
Keywords: backward induction, interactive epistemology, player set cardinality, experiment
JEL Classification: C720, C920