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- Title
On forward induction in money-burning games.
- Authors
Shimoji, Makoto
- Abstract
We first consider money-burning games studied by Ben-Porath and Dekel [6]. We show that iterative weak dominance and extensive form rationalizability yield the same unique outcome in this class of games. This result suggests that weak dominance captures the forward induction logic implied by extenisve form rationalizability. Next, we consider an example of entry model by Arvan [1] to demonstrate the power of forward induction. In this example, despite the presence of multiple equilibria, forward induction chooses a unique outcome.
- Subjects
INDUCTION (Logic); ECONOMICS
- Publication
Economic Theory, 2002, Vol 19, Issue 3, p637
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/s001990100169