We show that paradoxical conclusions similar to those emerging from reasonings of backward induction can arise also in simultaneous move games with incomplete information.
In a static setting, these paradoxes are particularly puzzling, because the usual attempts to avoid the backward induction solution do not work.
In a dynamic setting, there is a way out of the paradoxes, which hinges on a
... [Show full abstract] (possibly endogenous) uncertainty over the past behaviour of the players and does not call for a long time–horizon.