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MENTAL MODEL · M8199

Backward Induction

Backward Induction
DecideHigh supportDecision Science
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Updated 2026-08-11

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INTRODUCTION

English translation pending.

CORE DEFINITION

Backward induction solves a sequential game or decision by starting at the terminal nodes: it determines what each player would do at the final move, substitutes that behavior into the preceding decision, and repeats back to the start. The result is a strategy in which every early move is optimal given that all later players will also be optimal, which is the subgame-perfect equilibrium and a sharper solution than one that assumes rational play only at the start.

SCAFFOLDING EFFECT

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Reduce cognitive load

- Draw the endgame: write the tree and its terminal payoffs. - Solve the last move: determine optimal play at each terminal decision. - Fold backward: substitute the answer into the preceding choice.

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Anchor fast decisions

A move early in the game is only rational relative to what will happen later, and later behavior is determined first because it faces no further dependency. Solving from the end backward makes each earlier choice conditional on the actual continuation rather than on a guess about it, which is what makes the equilibrium subgame-perfect rather than merely stable.

MINIMUM ACTION

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Source support: Explicit

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    en.wikipedia.orghttps://en.wikipedia.org/wiki/Backward_inductionZH · Explicit
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