Concept:
Electromagnetic induction is the process in which a changing magnetic field produces induced current in a conductor.
Step 1: Understand the working of an induction stove.
An induction stove contains a coil of wire beneath its surface.
When alternating current flows through the coil, a continuously changing magnetic field is produced.
Step 2: Formation of induced current.
When a metallic utensil is placed on the stove, the changing magnetic field induces eddy currents in the base of the utensil.
These currents generate heat due to electrical resistance.
Step 3: Identify the principle involved.
Since heating occurs because of induced current produced by changing magnetic field, the stove works on:
\[
\boxed{\text{Electromagnetic induction}}
\]
Hence, the correct answer is option (3).