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Bilateral Commitment

Bade, Sophie and Haeringer, Guillaume and Renou, Ludovic (2006) Bilateral Commitment. Working Paper. University of Adelaide School of Economics Working Papers.

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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.

Item Type: Monograph (Working Paper)
Uncontrolled Keywords: commitment; self-enforcing; treaties; inefficiency; agreements; Pareto-improvement
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 07 Jan 2013 12:22
Last Modified: 07 Jan 2013 12:22
URI: http://repository.essex.ac.uk/id/eprint/5014

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