Event Detail

A crucial assumption underlying any game-theoretic analysis is that there is common knowledge that all the players are rational. Rationality is understood in the decision-theoretic sense: The players’ choices are optimal according to some choice rule (such as maximizing subjective expected utility). Research on the epistemic foundations of game theory is focused on the game-theoretic implications of different notions of rationality and different assumptions about what the players know and believe about each other. In this talk, I will provide a brief overview of this literature. A key question is what should the players assume about how their opponents will interpret their moves in the game? Two prominent answers have been discussed in the literature: forward induction and backward induction. According to the former, players rationalize past behavior and use it as a basis for forming beliefs about future moves. According to the latter, players ignore past behavior and reason only about their opponents’ future moves. There are sophisticated mathematical models that formalize the implications of each way of reasoning. In this talk, I will consider a different question that has not received as much attention: How should the players choose between the two styles of reasoning? I will present a formal model of strategic reasoning introduced by Brian Skyrms and show how it needs to be modified to address this question.