Hypothetical knowledge and games with perfect information

Standard structures of information, in particular partition structures, are inadequate for the modeling of strategic thinking. They fail to capture the inner structure of hypotheses players make about situations they know will not occur. An extension of the partition structure is proposed in which such hypotheses can be modeled in detail. Hypothetical knowledge operators are defined for extended structures and are axiomatically characterized. The use of extended structures to model games with complete information is demonstrated. A sufficient condition is derived for players to play the backward induction in such games. (C) 1996 Academic Press, Inc.