The Value of Commitment with Imperfect Observability and Private Information
AbstractThe idea that commitment is valuable plays a key role in many economic models. However, Bagwell (1995) has shown that commitment may have no value if there is (even a slight) noise in the observation of the leader's action, thus casting doubt on the notion that commitment has strategic value. Here I reconsider the commitment story in a model where the leader's action is imperfectly observed and the leader has private information, and I examine how it is affected by uncertainty about the leader's type and by the observation noise.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 30 (1999)
Issue (Month): 4 (Winter)
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- Tanja Hörtnagl & Rudolf Kerschbamer, 2014. "How the Value of Information Shapes the Value of Commitment Or: Why the Value of Commitment Does Not Vanish," Working Papers, Faculty of Economics and Statistics, University of Innsbruck 2014-03, Faculty of Economics and Statistics, University of Innsbruck.
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- Shelegia, Sandro, 2012. "Imperfect information in a quality-competitive hospital market. A comment on Gravelle and Sivey," MPRA Paper 42121, University Library of Munich, Germany.
- Corona, Carlos & Nan, Lin, 2013. "Preannouncing competitive decisions in oligopoly markets," Journal of Accounting and Economics, Elsevier, Elsevier, vol. 56(1), pages 73-90.
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