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Yale University

Sequential Games: Moral Hazard, Incentives, and Backward Induction

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Overview

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This lecture introduces sequential games and backward induction through a borrower–lender example. It examines moral hazard, incentive-design contracts, and commitment strategies such as collateral and burning boats.

Syllabus

- Chapter 1. Sequential Games: Backward Induction.
- Chapter 2. Sequential Games: Moral Hazard.
- Chapter 3. Sequential Games: Incentive Design.
- Chapter 4. Sequential Games: Commitment Strategies.
- Chapter 5. Sequential Games: Backward Induction Is Really Important.

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