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Bilateral Commitment

Author

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

Abstract

We consider non-cooperative environments in which two players have the power to commit but cannot sign binding agreements. We show that by committing to a set of actions rather than to a single action, players can implement a wide range of action profiles. We give a complete characterization of implementable profiles and provide a simple method to find them. Profiles implementable by bilateral commitments are shown to be generically inefficient. Surprisingly, allowing for gradualism (i.e., step by step commitment) does not change the set of implementable profiles.

Suggested Citation

  • Bade, Sophie & Haeringer, Guillaume & Renou, Ludovic, 2006. "Bilateral Commitment," Coalition Theory Network Working Papers 12160, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemct:12160
    DOI: 10.22004/ag.econ.12160
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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. Koessler, Frédéric & Lambert-Mogiliansky, Ariane, 2013. "Committing to transparency to resist corruption," Journal of Development Economics, Elsevier, vol. 100(1), pages 117-126.
    3. Halpern, Joe & Heller, Yuval & Winter, Eyal, 2022. "The Benefits of Coarse Preferences," MPRA Paper 111670, University Library of Munich, Germany.
    4. Grégoire Rota-Graziosi, 2016. "Implementing Tax Coordination and Harmonization through Voluntary Commitment," Working Papers halshs-01332058, HAL.
    5. Renou, Ludovic, 2009. "Commitment games," Games and Economic Behavior, Elsevier, vol. 66(1), pages 488-505, May.
    6. 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.
    7. Nie, Pu-yan, 2013. "Duopoly quality commitment," Economic Modelling, Elsevier, vol. 33(C), pages 832-842.
    8. Tomala, Tristan & Koessler, Frederic & Laclau, Marie, 2018. "Interactive Information Design," HEC Research Papers Series 1260, HEC Paris, revised 02 May 2018.
    9. Miettinen, Topi & Perea, Andrés, 2015. "Commitment in alternating offers bargaining," Mathematical Social Sciences, Elsevier, vol. 76(C), pages 12-18.
    10. 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.
    11. 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.
    12. 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.
    13. 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.
    14. 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

    Institutional and Behavioral Economics;

    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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