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Coordinating by Not Committing : Efficiency as the Unique Outcome

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  • Rohan Dutta
  • Ryosuke Ishii

Abstract

An important form of commitment is the ability to restrict the set of future actions from which choices can be made. We study a simple dynamic game of complete information which incorporates this type of commitment. For a given initial game, the players engage in an endogenously determined number of commitment periods before choosing from the remaining actions. We show the existence of equilibria with pure strategies in the commitment periods. For important classes of games, including pure coordination games and the staghunt game the equilibrium outcome is unique and efficient. This is despite the synchronous move structure. Moreover, efficient coordination does not necessarily involve commitments on the equilibrium path: the option alone is sufficient.

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Bibliographic Info

Paper provided by Centre interuniversitaire de recherche en économie quantitative, CIREQ in its series Cahiers de recherche with number 10-2013.

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Length: 38 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:mtl:montec:10-2013

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Related research

Keywords: Dynamic Commitment; Endogenous Timing; Coordination Games; Uniqueness; Payoff Dominance; Stag Hunt;

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  1. Matthew O. Jackson & Simon Wilkie, 2005. "Endogenous Games and Mechanisms: Side Payments Among Players," Review of Economic Studies, Oxford University Press, vol. 72(2), pages 543-566.
  2. Renou, Ludovic, 2009. "Commitment games," Games and Economic Behavior, Elsevier, vol. 66(1), pages 488-505, May.
  3. Barton L. Lipman & Ruqu Wang, 1997. "Switching Costs in Frequently Repeated Games," Discussion Papers 1190, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  4. Van Damme, E. & Hurkens, S., 1993. "Commitment Robust Equilibria and Endogenous Timing," Papers 9356, Tilburg - Center for Economic Research.
  5. Roger Lagunoff & Akihiko Matsui, 1997. "Asynchronous Choice in Repeated Coordination Games," Econometrica, Econometric Society, vol. 65(6), pages 1467-1478, November.
  6. Sophie Bade & Guillaume Haeringer & Ludovic Renou, 2008. "Bilateral Commitment," Discussion Papers in Economics 08/20, Department of Economics, University of Leicester.
  7. Chaim Fershtman & Kenneth L. Judd & Ehud Kalai, 1990. "Observable Contracts: Strategic Delegation and Cooperation," Discussion Papers 879, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  8. Kalai, Adam Tauman & Kalai, Ehud & Lehrer, Ehud & Samet, Dov, 2010. "A commitment folk theorem," Games and Economic Behavior, Elsevier, vol. 69(1), pages 127-137, May.
  9. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-80, January.
  10. Romano, Richard & Yildirim, Huseyin, 2005. "On the endogeneity of Cournot-Nash and Stackelberg equilibria: games of accumulation," Journal of Economic Theory, Elsevier, vol. 120(1), pages 73-107, January.
  11. Dutta, Prajit K., 2012. "Coordination need not be a problem," Games and Economic Behavior, Elsevier, vol. 76(2), pages 519-534.
  12. Hamilton, J.H. & Slutsky, S.M., 1988. "Endogenous Timing In Duopoly Games: Stackelberg Or Cournot Equilibria," Papers 88-4, Florida - College of Business Administration.
  13. Guillermo Caruana & Liran Einav, 2008. "A Theory of Endogenous Commitment," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 99-116.
  14. Calcagno, Riccardo & Sugaya, Takuo & Kamada, Yuichiro & Lovo, Stefano, 0. "Asynchronicity and coordination in common and opposing interest games," Theoretical Economics, Econometric Society.
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