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Statistical Backwards Induction: A Simple Method for Estimating Recursive Strategic Models

  • Muhammet Ali Bas (a1), Curtis S. Signorino (a2) and Robert W. Walker (a3)
Abstract

We present a simple method for estimating regressions based on recursive extensive-form games. Our procedure, which can be implemented in most standard statistical packages, involves sequentially estimating standard logits (or probits) in a manner analogous to backwards induction. We demonstrate that the technique produces consistent parameter estimates and show how to calculate consistent standard errors. To illustrate the method, we replicate Leblang's (2003) study of speculative attacks by financial markets and government responses to these attacks.

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e-mail: mbas@gov.harvard.edu (corresponding author)
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Authors' note: Our thanks to Kevin Clarke, John Londregan, Jeff Ritter, Ahmer Tarar, and Kuzey Yilmaz for helpful discussions concerning this paper. A previous version was presented at the 2002 Political Methodology Summer Meeting.

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Political Analysis
  • ISSN: 1047-1987
  • EISSN: 1476-4989
  • URL: /core/journals/political-analysis
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