Belief system foundations of backward induction

Theory and Decision 53 (4):393-403 (2002)
Abstract
Two justifications of backward induction (BI) in generic perfect information games are formulated using Bonanno's (1992; Theory and Decision 33, 153) belief systems. The first justification concerns the BI strategy profile and is based on selecting a set of rational belief systems from which players have to choose their belief functions. The second justification concerns the BI path of play and is based on a sequential deletion of nodes that are inconsistent with the choice of rational belief functions.
Keywords Backward induction  Bonanno's belief systems  Perfect information game  Rationality
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DOI 10.1023/A:1024102216631
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