The Game Take-or-Play: A paradox of Rationality in Simultaneous Move Games

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2 Citations (Scopus)

Abstract

We show that paradoxical conclusions similar to those emerging from reasonings of backward induction can arise also in simultaneous move games with incomplete information. In a static setting, these paradoxes are particularly puzzling, because the usual attempts to avoid the backward induction solution do not work. In a dynamic setting, there is a way out of the paradoxes, which hinges on a (possibly endogenous) uncertainty over the past behaviour of the players and does not call for a long time-horizon.
Original languageEnglish
Pages (from-to)195-202
Number of pages8
JournalBulletin of Economic Research
Volume55
Publication statusPublished - 2003

Keywords

  • backward induction
  • belief revision
  • common knowledge
  • game theory
  • paradox
  • rational choice

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