The Backward Induction Argument

Theory and Decision 48 (1):61-84 (2000)
The backward induction argument purports to show that rational and suitably informed players will defect throughout a finite sequence of prisoner's dilemmas. It is supposed to be a useful argument for predicting how rational players will behave in a variety of interesting decision situations. Here, I lay out a set of assumptions defining a class of finite sequences of prisoner's dilemmas. Given these assumptions, I suggest how it might appear that backward induction succeeds and why it is actually fallacious. Then, I go on to consider the consequences of adopting a stronger set of assumptions. Focusing my attention on stronger sets that, like the original, obey the informedness condition, I show that any supplementation of the original set that preserves informedness does so at the expense of forcing rational participants in prisoner's dilemma situations to have unexpected beliefs, ones that threaten the usefulness of backward induction.
Keywords Backward induction  Iterated prisoner's dilemma  Common knowledge
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DOI 10.1023/A:1005171122710
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Joe Mintoff (1999). Decision-Making and the Backward Induction Argument. Pacific Philosophical Quarterly 80 (1):64–77.
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