IDEAS home Printed from
   My bibliography  Save this article

The Fragility of Commitment


  • John Morgan

    () (Haas School of Business and Department of Economics, University of California, Berkeley, Berkeley, California 94720)

  • Felix Várdy

    () (Haas School of Business, University of California, Berkeley, Berkeley, California 94720; and International Monetary Fund, Washington, DC 20431)


We show that the value of commitment is fragile in many standard games. When the follower faces a small cost to observe the leader's action, equilibrium payoffs are identical to the case where the leader's actions are unobservable. Applications of our result include standard Stackelberg--Cournot and differentiated product Bertrand games, as well as forms of indirect commitment, highlighted in Bulow et al. [Bulow J, Geanakoplos J, Klemperer P (1985) Multimarket oligopoly: Strategic substitutes and strategic complements. J. Political Econom. 93:488--511]. Weakening full rationality in favor of boundedly rational solution concepts such as quantal-response equilibrium restores the value of commitment. This paper was accepted by Peter Wakker, decision analysis.

Suggested Citation

  • John Morgan & Felix Várdy, 2013. "The Fragility of Commitment," Management Science, INFORMS, vol. 59(6), pages 1344-1353, June.
  • Handle: RePEc:inm:ormnsc:v:59:y:2013:i:6:p:1344-1353

    Download full text from publisher

    File URL:
    Download Restriction: no


    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:inm:ormnsc:v:59:y:2013:i:6:p:1344-1353. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.