backward induction
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We consider games in which players move sequentially rather than simultaneously, starting with a game involving a borrower and a lender. We analyze the game using "backward induction." The game features moral hazard: the borrower will not repay a large loan. We discuss possible remedies for this kind of problem. One remedy involves incentive design: writing contracts that give the borrower an incentive to repay. Another involves commitment...more
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We analyze three games using our new solution concept, subgame perfect equilibrium (SPE). The first game involves players' trusting that others will not make mistakes. It has three Nash equilibria but only one is consistent with backward induction. We show the other two Nash equilibria are not subgame perfect: each fails to induce Nash in a subgame. The second game involves a matchmaker sending a couple on a date. There are three Nash equi...more
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The Art of Illustration: Millais, the Pre-Raphaelites and the Idyllic School
Gresham College / Art & Architecture
The final and 'most indispensable' founding principle of the Pre-Raphaelites was: "to produce thoroughly good pictures and statues". Derided by the establishment (including Charles Dickens) for producing art which was ugly and backward, the work of John Everett Millais, Dante Gabriel Rossetti and William Holman Hunt have since come to take its place as perhaps the most important point of British art in the 19th Century. This lecture lo...more
