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Bilateral Commitment

Author

Listed:
  • Guillaume Haeringer

    (Universitat Autònoma de Barcelona)

  • Sophie Bade

    (Penn State University)

  • Ludovic Renou

    (Napier Building)

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

  • Guillaume Haeringer & Sophie Bade & Ludovic Renou, 2006. "Bilateral Commitment," Working Papers 2006.75, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2006.75
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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. Grégoire Rota-Graziosi, 2016. "Implementing Tax Coordination and Harmonization through Voluntary Commitment," Working Papers halshs-01332058, HAL.
    4. Renou, Ludovic, 2009. "Commitment games," Games and Economic Behavior, Elsevier, vol. 66(1), pages 488-505, May.
    5. Tomala, Tristan & Koessler, Frederic & Laclau, Marie, 2018. "Interactive Information Design," HEC Research Papers Series 1260, HEC Paris, revised 02 May 2018.
    6. Heller, Yuval & Winter, Eyal, 2013. "Rule Rationality," MPRA Paper 48746, University Library of Munich, Germany.
    7. Nie, Pu-yan, 2013. "Duopoly quality commitment," Economic Modelling, Elsevier, vol. 33(C), pages 832-842.
    8. Miettinen, Topi & Perea, Andrés, 2015. "Commitment in alternating offers bargaining," Mathematical Social Sciences, Elsevier, vol. 76(C), pages 12-18.
    9. 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.
    10. 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.
    11. 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.
    12. 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; Treaties; Inefficiency; Agreements; Pareto-improvement;
    All these keywords.

    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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