IDEAS home Printed from https://ideas.repec.org/a/eee/jetheo/v163y2016icp699-727.html
   My bibliography  Save this article

Dynamic commitment games, efficiency and coordination

Author

Listed:
  • Dutta, Rohan
  • Ishii, Ryosuke

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 two player 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. Partial characterization results for general games capture the tradeoff between commitment and deterrence. The equilibrium outcome is unique and efficient for two classes of games, including pure coordination and stag-hunt games.

Suggested Citation

  • Dutta, Rohan & Ishii, Ryosuke, 2016. "Dynamic commitment games, efficiency and coordination," Journal of Economic Theory, Elsevier, vol. 163(C), pages 699-727.
    • Handle: RePEc:eee:jetheo:v:163:y:2016:i:c:p:699-727
    DOI: 10.1016/j.jet.2016.03.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0022053116000387
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jet.2016.03.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hamilton, Jonathan H. & Slutsky, Steven M., 1990. "Endogenous timing in duopoly games: Stackelberg or cournot equilibria," Games and Economic Behavior, Elsevier, vol. 2(1), pages 29-46, March.
    2. van Damme, Eric & Hurkens, Sjaak, 1996. "Commitment Robust Equilibria and Endogenous Timing," Games and Economic Behavior, Elsevier, vol. 15(2), pages 290-311, August.
    3. Saloner, Garth, 1987. "Cournot duopoly with two production periods," Journal of Economic Theory, Elsevier, vol. 42(1), pages 183-187, June.
    4. 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.
    5. Roger Lagunoff & Akihiko Matsui, 1997. "Asynchronous Choice in Repeated Coordination Games," Econometrica, Econometric Society, vol. 65(6), pages 1467-1478, November.
    6. Fershtman, Chaim & Judd, Kenneth L & Kalai, Ehud, 1991. "Observable Contracts: Strategic Delegation and Cooperation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 551-559, August.
    7. Fershtman, Chaim & Kalai, Ehud, 1997. "Unobserved Delegation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(4), pages 763-774, November.
    8. Lipman, Barton L. & Wang, Ruqu, 2000. "Switching Costs in Frequently Repeated Games," Journal of Economic Theory, Elsevier, vol. 93(2), pages 149-190, August.
    9. Guillermo Caruana & Liran Einav, 2008. "A Theory of Endogenous Commitment," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 99-116.
    10. Anat R. Admati & Motty Perry, 1991. "Joint Projects without Commitment," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 259-276.
    11. 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.
    12. Bade, Sophie & Haeringer, Guillaume & Renou, Ludovic, 2009. "Bilateral commitment," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1817-1831, July.
    13. Michael L. Katz, 1991. "Game-Playing Agents: Unobservable Contracts as Precommitments," RAND Journal of Economics, The RAND Corporation, vol. 22(3), pages 307-328, Autumn.
    14. Takahashi, Satoru, 2005. "Infinite horizon common interest games with perfect information," Games and Economic Behavior, Elsevier, vol. 53(2), pages 231-247, November.
    15. Ben-Porath, Elchanan & Dekel, Eddie, 1992. "Signaling future actions and the potential for sacrifice," Journal of Economic Theory, Elsevier, vol. 57(1), pages 36-51.
    16. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-180, January.
    17. Dutta, Prajit K., 2012. "Coordination need not be a problem," Games and Economic Behavior, Elsevier, vol. 76(2), pages 519-534.
    18. Caruana, Guillermo & Einav, Liran & Quint, Daniel, 2007. "Multilateral bargaining with concession costs," Journal of Economic Theory, Elsevier, vol. 132(1), pages 147-166, January.
    19. Tore Ellingsen & Topi Miettinen, 2008. "Commitment and Conflict in Bilateral Bargaining," American Economic Review, American Economic Association, vol. 98(4), pages 1629-1635, September.
    20. 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.
    21. Yildirim, Huseyin, 2005. "Contests with multiple rounds," Games and Economic Behavior, Elsevier, vol. 51(1), pages 213-227, April.
    22. Levent Koçkesen & Efe A. Ok, 2004. "Strategic Delegation By Unobservable Incentive Contracts," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 397-424.
    23. Renou, Ludovic, 2009. "Commitment games," Games and Economic Behavior, Elsevier, vol. 66(1), pages 488-505, May.
    24. , & , & , & ,, 2014. "Asynchronicity and coordination in common and opposing interest games," Theoretical Economics, Econometric Society, vol. 9(2), May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tomala, Tristan & Koessler, Frederic & Laclau, Marie, 2018. "Interactive Information Design," HEC Research Papers Series 1260, HEC Paris, revised 02 May 2018.
    2. Arieli, Itai & Babichenko, Yakov & Tennenholtz, Moshe, 2017. "Sequential commitment games," Games and Economic Behavior, Elsevier, vol. 105(C), pages 297-315.
    3. Laura Doval & Jeffrey C. Ely, 2020. "Sequential Information Design," Econometrica, Econometric Society, vol. 88(6), pages 2575-2608, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Bade, Sophie & Haeringer, Guillaume & Renou, Ludovic, 2009. "Bilateral commitment," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1817-1831, July.
    3. James W. Bono & David H. Wolpert, 2014. "Game Mining: How to Make Money from those about to Play a Game," Advances in Austrian Economics, in: Entangled Political Economy, volume 18, pages 179-211, Emerald Group Publishing Limited.
    4. James W. Bono & David H. Wolpert, 2009. "Game Mining: How to Make Money from those about to Play a Game," Working Papers 2009-10, American University, Department of Economics.
    5. Grégoire ROTA-GRAZIOSI, 2016. "Implementing Tax Coordination and Harmonization through Voluntary Commitment," Working Papers P181, FERDI.
    6. Walter A Cont, 2001. "Essays on Contract Design: Delegation and Agency Problems, and Monitoring Under Collusion," Levine's Working Paper Archive 625018000000000122, David K. Levine.
    7. Hongbin Cai & Walter Cont, 2004. "Agency Problems and Commitment in Delegated Bargaining," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(4), pages 703-729, December.
    8. Tigran Melkonyan & Surajeet Chakravarty, 2024. "Pre‐play promises, threats and commitments under partial credibility," Economic Inquiry, Western Economic Association International, vol. 62(1), pages 308-328, January.
    9. Caruana, Guillermo & Einav, Liran & Quint, Daniel, 2007. "Multilateral bargaining with concession costs," Journal of Economic Theory, Elsevier, vol. 132(1), pages 147-166, January.
    10. Bhaskar, V., 2009. "Games played in a contracting environment," Games and Economic Behavior, Elsevier, vol. 67(2), pages 389-398, November.
    11. Renou, Ludovic, 2009. "Commitment games," Games and Economic Behavior, Elsevier, vol. 66(1), pages 488-505, May.
    12. Gerratana Emanuele & Koçkesen Levent, 2012. "Strategic Effects of Renegotiation-Proof Contracts," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 12(1), pages 1-49, July.
    13. Miettinen, Topi & Perea, Andrés, 2015. "Commitment in alternating offers bargaining," Mathematical Social Sciences, Elsevier, vol. 76(C), pages 12-18.
    14. repec:zbw:rwirep:0270 is not listed on IDEAS
    15. Ilkka Leppänen, 2020. "Partial commitment in an endogenous timing duopoly," Annals of Operations Research, Springer, vol. 287(2), pages 783-799, April.
    16. Rusche, Christian, 2011. "Does Delegation Help to Prevent Spiteful Behavior?," Ruhr Economic Papers 270, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    17. Doraszelski, Ulrich & Escobar, Juan F., 2019. "Protocol invariance and the timing of decisions in dynamic games," Theoretical Economics, Econometric Society, vol. 14(2), May.
    18. Ritz, Robert A., 2008. "Strategic incentives for market share," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 586-597, March.
    19. Emanuele Gerratana & Levent Koçkesen, 2015. "Commitment without reputation: renegotiation-proof contracts under asymmetric information," Review of Economic Design, Springer;Society for Economic Design, vol. 19(3), pages 173-209, September.
    20. , & , & , & ,, 2014. "Asynchronicity and coordination in common and opposing interest games," Theoretical Economics, Econometric Society, vol. 9(2), May.
    21. Arieli, Itai & Babichenko, Yakov & Tennenholtz, Moshe, 2017. "Sequential commitment games," Games and Economic Behavior, Elsevier, vol. 105(C), pages 297-315.

    More about this item

    Keywords

    Dynamic commitment; Endogenous timing; Deterrence; Coordination games; Payoff dominance; Stag hunt;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jetheo:v:163:y:2016:i:c:p:699-727. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622869 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.