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Backward Induction Paradox
A situation in dynamic games where the logic of backward induction leads to an outcome that seems irrational when viewed from a different perspective.
Implications
Occurs when the process of backward induction leads to an outcome that seems counterintuitive or irrational, often studied in game theory.
Example
Example: In the Centipede game, players using backward induction end up with an early and suboptimal end, illustrating the paradox where rational decisions lead to a worse outcome.
Related Terms
Different from standard backward induction, the paradox highlights situations where logical decision-making produces outcomes that seem irrational.
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