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Bilateral commitment

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  • Bade, Sophie
  • Haeringer, Guillaume
  • Renou, Ludovic

Abstract

We consider non-cooperative environments in which two players have the power to gradually and unilaterally rule out some of their actions. Formally, we embed a strategic-form game into a multi-stage game, in which players can restrict their action spaces in all but the final stage, and select among the remaining actions in the last stage. We say that an action profile is implementable by commitment if this action profile is played in the last stage of a subgame-perfect equilibrium path. We provide a complete characterization of all implementable action profiles and a simple method to find them. It turns out that the set of implementable profiles does not depend on the length of the commitment process. We show, furthermore, that commitments can have social value in the sense that in some games there are implementable action profiles that dominate all Nash equilibria of the original game.

Suggested Citation

  • Bade, Sophie & Haeringer, Guillaume & Renou, Ludovic, 2009. "Bilateral commitment," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1817-1831, July.
  • Handle: RePEc:eee:jetheo:v:144:y:2009:i:4:p:1817-1831
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    Cited by:

    1. Dutta, Rohan & Ishii, Ryosuke, 2016. "Dynamic commitment games, efficiency and coordination," Journal of Economic Theory, Elsevier, vol. 163(C), pages 699-727.
    2. Renou, Ludovic, 2009. "Commitment games," Games and Economic Behavior, Elsevier, vol. 66(1), pages 488-505, May.
    3. Tomala, Tristan & Koessler, Frederic & Laclau, Marie, 2018. "Interactive Information Design," HEC Research Papers Series 1260, HEC Paris, revised 02 May 2018.
    4. Yuval Heller & Eyal Winter, 2016. "Rule Rationality," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57(3), pages 997-1026, August.
    5. Koessler, Frédéric & Lambert-Mogiliansky, Ariane, 2013. "Committing to transparency to resist corruption," Journal of Development Economics, Elsevier, vol. 100(1), pages 117-126.
    6. Grégoire ROTA-GRAZIOSI, 2016. "Implementing Tax Coordination and Harmonization through Voluntary Commitment," Working Papers P181, FERDI.
    7. Jianpei Li & Paul Schweinzer, 2013. "Efficiency in strategic form games: A little trust can go a long way," Discussion Papers 13/19, Department of Economics, University of York.
    8. Miettinen, Topi & Perea, Andrés, 2015. "Commitment in alternating offers bargaining," Mathematical Social Sciences, Elsevier, vol. 76(C), pages 12-18.
    9. Conley, John P. & Neilson, William, 2009. "Endogenous games and equilibrium adoption of social norms and ethical constraints," Games and Economic Behavior, Elsevier, vol. 66(2), pages 761-774, July.
    10. Nie, Pu-yan, 2013. "Duopoly quality commitment," Economic Modelling, Elsevier, vol. 33(C), pages 832-842.
    11. Halpern, Joe & Heller, Yuval & Winter, Eyal, 2022. "The Benefits of Coarse Preferences," MPRA Paper 111670, University Library of Munich, Germany.
    12. Rohan Dutta & Ryosuke Ishii, 2013. "Coordinating by Not Committing : Efficiency as the Unique Outcome," Cahiers de recherche 10-2013, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    13. Pei, Harry Di, 2016. "When does restricting your opponent's freedom hurt you?," Games and Economic Behavior, Elsevier, vol. 100(C), pages 234-239.

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    More about this item

    Keywords

    Commitment Self-enforcing Pareto-improvement;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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