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Bilateral Commitment

  • Sophie Bade
  • Guillaume Haeringer
  • Ludovic Renou

    ()

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.

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File URL: http://www.le.ac.uk/economics/research/RePEc/lec/leecon/dp08-20.pdf
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Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 08/20.

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Date of creation: Jun 2008
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Handle: RePEc:lec:leecon:08/20
Contact details of provider: Postal: Department of Economics University of Leicester, University Road. Leicester. LE1 7RH. UK
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Fax: +44 (0)116 252 2908
Web page: http://www2.le.ac.uk/departments/economicsEmail:


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  1. Yildirim, Huseyin, 2005. "Contests with multiple rounds," Games and Economic Behavior, Elsevier, vol. 51(1), pages 213-227, April.
  2. Eric van Damme & Sjaak Hurkens, 1996. "Endogenous Stackelberg leadership," Economics Working Papers 190, Department of Economics and Business, Universitat Pompeu Fabra.
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  4. Muthoo, Abhinay, 1996. "A Bargaining Model Based on the Commitment Tactic," Journal of Economic Theory, Elsevier, vol. 69(1), pages 134-152, April.
  5. Sophie Bade & Guillaume Haeringer & Ludovic Renou, 2005. "More Strategies, More Nash Equilibria," School of Economics Working Papers 2005-01, University of Adelaide, School of Economics.
  6. Lockwood, B. & Thomas, J.P., 1999. "Gradualism and Irreversibility," The Warwick Economics Research Paper Series (TWERPS) 550, University of Warwick, Department of Economics.
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  14. Renou, Ludovic, 2009. "Commitment games," Games and Economic Behavior, Elsevier, vol. 66(1), pages 488-505, May.
  15. repec:ner:tilbur:urn:nbn:nl:ui:12-154410 is not listed on IDEAS
  16. Milgrom, P. & Shannon, C., 1991. "Monotone Comparative Statics," Papers 11, Stanford - Institute for Thoretical Economics.
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  19. Harris, Christopher & Reny, Philip & Robson, Arthur, 1995. "The Existence of Subgame-Perfect Equilibrium in Continuous Games with Almost Perfect Information: A Case for Public Randomization," Econometrica, Econometric Society, vol. 63(3), pages 507-44, May.
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