Wealth Differences in a Centipede Game: Backward Induction in an Experimental Economics Framework
Sanjukta Basu, Santanu Mitra, Gautam Gupta

Abstract
In this paper we report the results of a laboratory experiment of a six stage centipede game played with partners from the same income group as opposed to a partner from a different income group. The results of our experiment were not very different from those obtained in earlier experiments in the sense that there was very little evidence of either backward induction or outright cooperation. Few subjects (<20%) adopted the backward induction strategy to take in the first round, while there was no partner combination that carried out the game till the final or sixth stage. Moreover, playing with same income group partner and playing with different income group partner does induce remarkably different behavior.

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