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Backward Induction
A method used to solve dynamic games by analyzing the game from the end (final outcomes) and moving backward to determine optimal strategies.
Implications
A method used in game theory and decision-making to solve problems by analyzing them from the end to the beginning, ensuring the best outcome is achieved.
Example
Example: A company uses backward induction to plan a product launch, starting from the desired market share and working backwards to set marketing and production goals.
Related Terms
Different from forward planning, which starts from the present and plans towards the future, backward induction begins with the end goal and plans backwards.
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