Backward induction is a technique where people work back from a known outcome through the series of decisions that could lead to that outcome to assist them with the decision-making process. This phenomenon can most commonly be seen in game theory, where it is also known as retrograde analysis. It can play a role in how people make decisions about major events, and a number of studies have been used to explore the way humans use backward induction in their activities.
In game theory, a skilled opponent can use backward induction to gain an advantage in the game. In a chess match, for example, a player creates a hypothetical ending of checkmate, placing herself as the winner, and moves back through a series of maneuvers to see how that ending could be reached. The strategy of the other player will be important to factor in, as the chess player can think about how her opponent may behave. His moves will influence the outcome, and the ability to predict them will allow her to maneuver him into a corner.
This technique can also be seen in use with other kinds of decision making. The backward induction process requires developing a theoretical outcome and determining the best way to reach it, given the possible decisions that might be involved. When a person is presented with a series of choices, the decision made at each point can determine whether the desired outcome is favorable. This can determine whether accepting an offer, entering a competition, or engaging in other activities is likely to be beneficial.
The use of backward induction to reach logical decisions is more common in some populations than others. Chess players are very accustomed to this technique, and they may use it in settings beyond chess competitions because it is part of their thought process. Players of other games may be less likely to approach decision making from this perspective, as they are not accustomed to working backward from a desirable outcome to figure out how to get there when the process involves multiple decisions.
Flaws with the backward induction process are present, as with other decision-making logic. It is often based on predictions about the behavior of others and if these are wrong, the end result may be different. To use this technique effectively, it is necessary to have as much information as possible about all of the factors that might influence decisions at each step, in order to predict accurately.