Abstract:Backward induction is a common method to analyze the dynamic game with perfect information and draw inevitable conclusions with complete induction. However, when used to analyze the centipede game, the theoretical prediction deviates from the actual behaviors in real games, resulting in paradox. The centipede game has an intricate and delicate structure. Players deliberate the payoffs and intend to cooperate in the non-cooperative game, which influence their belief change when making decisions. Subjects do not have absolute rationality in reality, the subjective sensation along with belief change determines whether or not the subject believes his decision is rational. According to the theory of belief revision, a general analytical framework can be constructed to describe causes of the decision making in the centipede game.
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