What is the correct sequence of steps to apply backward induction in a sequential game scenario?

Backward induction starts by looking at the last move of the game and figuring out which choice gives the last player the best payoff. You then record that optimal choice and pretend it has already happened. Next, you go to the player who moves just before the last one, replace the future player’s move with the optimal outcome you just found, and decide which of their options gives them the highest payoff. You repeat this “step back” process, moving one player at a time toward the beginning of the game. When you reach the first player, you have a complete set of optimal choices for every player, as in a simple two‑player coin game where the second player picks the higher value, and the first player anticipates that and chooses accordingly.