Shimoji, M. (2002) On forward induction in money-burning games. Economic Theory, 19 (3). pp. 637-648. ISSN 0938-2259
We first consider money-burning games studied by Ben-Porath and Dekel . 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  to demonstrate the power of forward induction. In this example, despite the presence of multiple equilibria, forward induction chooses a unique outcome.
|Institution:||The University of York|
|Academic Units:||The University of York > Economics and Related Studies (York)|
|Depositing User:||York RAE Import|
|Date Deposited:||05 Jun 2009 11:26|
|Last Modified:||05 Jun 2009 11:26|
|Publisher:||Springer Science + Business Media|