Abstract: We analyze which normal form solution concepts capture
the notion of forward induction, as defined by van Damme [1] in the class
of generic two player normal form games preceded by an outside option.
We find that none of the known strategic stability concepts (including
Mertens stable sets and hyperstable sets) captures this form of forward
induction. On the other hand, we show that the evolutionary concept of
EES set (Swinkels [24]) is always consistent with forward induction.
Keywords: Forward induction, strategic stability, EES sets, index theory.
Classification Numbers: C72.
Journal of Economic Theory