Analysis of Extensive Form Games
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Analysis of Extensive Form Games book
Because individual rationality is a presumed prerequisite to game theory’s relevance, debates in political science over the application of that theory usually begin with the question: Are people rational? Of course, the word “rational” conjures up many meanings, depending on context and who uses it. For some analysts it means acting in accordance with goals that are deemed “reasonable.” Thus, because game theory’s ultimate purpose is to formulate general rules of action in such choice situations, game theory does not assume that people are rational; rather, it attempts to define what we might mean by this concept. Agendas, of course, represent only one class of games, but the useful conclusions we arrive at with them by using backward reduction suggests that we should try to generalize this process so that we can apply it more broadly. Since a subgame perfect equilibrium must have voters voting optimally in every subgame, we can replace all final nodes with their strategic equivalents.