Gradualism and Irreversibility
This paper considers a class of two-player dynamic games in which each player controls a one-dimensional action variable, interpreted as a level of cooperation. The dynamics are due to an irreversibility constraint: neither player can ever reduce his cooperation level. Payoffs are decreasing in one's own action, increasing in one's opponent's action. We characterize efficient symmetric equilibrium action paths; actions rise gradually over time and converge, when payoffs are smooth, to a level strictly below the one-shot efficient level, no matter how little discounting takes place. The analysis is extended to incorporate sequential moves and asymmetric equilibria. Copyright 2002, Wiley-Blackwell.
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Volume (Year): 69 (2002)
Issue (Month): 2 ()
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- Fershtman, C. & Nitzan, S., 1988.
"Dynamic Voluntary Provision Of Public Goods,"
21-88, Tel Aviv.
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