In a sequential move game analyzed using backward induction, players anticipate the actions of their opponents to select moves that maximize their own payoff. This technique is primarily used to determine the _____ strategy for each player.

Question

Seekh · Accepted Answer

Backward induction lets each player look ahead from the end of the game and reason backward about what will happen next. By doing this, each player can figure out which actions will lead to the best outcome for them, assuming everyone else also plays optimally. This process identifies the subgame perfect equilibrium strategy for each player, meaning the best plan of action at every possible point in the game. For example, in a simple two‑player bargaining game, backward induction shows that the first player offers a split that the second player will accept, leading to a stable outcome. Thus, the blank is filled with “subgame perfect equilibrium.

In a sequential move game analyzed using backward induction, players anticipate the actions of their opponents to select moves that maximize their own payoff. This technique is primarily used to determine the _____ strategy for each player.

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Deep Dive: Game Theory and Backward Induction

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