Game Theory Reveals Flaw in Common Knowledge of Rationality
Extensive form games are more complex than normal form games because players get more information as the game goes on. There are two ways to figure out the best strategies in these games: backward induction and forward induction. Backward induction is the most common method and helps find the best strategies that work in all parts of the game. If a game has only one best strategy, it's called generic. A famous proof shows that knowing everyone is rational means using backward induction. But actually, this idea of everyone being rational doesn't make sense in these types of games.