Backward Induction in the Wild: Evidence from the U.S. Senate

Abstract

Backward induction is a cornerstone of modern game theory. Yet, laboratory exper- iments consistently show that subjects fail to properly backward induct. Whether thesendings generalize to other, real-world settings remains an open question. This paper develops a simple model of sequential voting in the U.S. Senate that allows for a straightforward test of the null hypothesis of myopic play. Exploiting quasi-random variation in the alphabetical composition of the Senate and, there- fore, the order in which Senators get to cast their votes, the evidence suggests that agents do rely on backward reasoning. At the same time, Senators' backward in- duction prowess appears to be quite limited. In particular, there is no evidence of Senators reasoning backwards on therst several hundred roll call votes in which they participate.