Multi-Stage Games

Abstract

Recall that the normal for game had players choose their actions simultaneously, and ignored any real issues concerning sequential behavior. The extensive form games we have analyzed included the ability to analyze sequential behavior and conditional choices. In the extensive forms we have seen, players played sequentially, with actions and information unfolding, but the payoffs were delayed until the game reached a terminal node that was associated with the game ending. In reality, dynamic play over time may be more complex than one game that unfolds over time. Instead, players can play one game that is followed by another, or maybe even several other games. Should we treat each game independently, or should we expect players to consider the sequence of different games as one “large” game?