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Bilateral Commitment

Haeringer, Guillaume and Bade, Sophie and Renou, Ludovic (2006) Bilateral Commitment. Working Paper. Fondazione Eni Enrico Mattei Working Papers.

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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 13:07
Last Modified: 07 Jan 2013 13:07

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