A necessary and sufficient epistemic condition for playing backward induction

Balkenborg, D. and Winter, E. (1997) A necessary and sufficient epistemic condition for playing backward induction. Journal of Mathematical Economics, 27 (3). pp. 325-345. ISSN 0304-4068

Abstract

In an epistemic framework due to Aumann we characterize the condition on the rationality of the players that is both necessary and sufficient to imply backward induction in perfect information games in agent form. This condition requires each player to know that the players are rational at later, but not at previous, decision nodes.