Module 2-2.2 A simple 2×2 game tree and its analysis using rollback reasoning

A short (12 minute) clip setting up a game tree (the clip explains how a simple game tree is constructed) to help represent the PDIP structure of a game. So a descriptive first part….Then the game is analysed using a method called rollback reasoning (Dixit and Skeath’s term) or “backward induction” (a term that is more common among game theorists. The key idea of backward induction in a sequential game is to start at the (a possible) end of the game, try to figure out what happens there, then step back….at each step knowing what to expect out of the possible futures from that point on. It’s definitely an important strategic idea with wide application in life…if you know how to use it.