Coordinating by Not Committing: Efficiency as the Unique Outcome

Rohan Dutta and Ryosuke Ishii

Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ

Abstract: An important form of commitment is the ability to restrict the set of future actions from which choices can be made. We study a simple dynamic game of complete information which incorporates this type of commitment. For a given initial game, the players engage in an endogenously determined number of commitment periods before choosing from the remaining actions. We show the existence of equilibria with pure strategies in the commitment periods. For important classes of games, including pure coordination games and the staghunt game the equilibrium outcome is unique and efficient. This is despite the synchronous move structure. Moreover, efficient coordination does not necessarily involve commitments on the equilibrium path: the option alone is sufficient.

Keywords: Dynamic Commitment; Endogenous Timing; Coordination Games; Uniqueness; Payoff Dominance; Stag Hunt (search for similar items in EconPapers)
JEL-codes: C72 C73 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2013
New Economics Papers: this item is included in nep-gth, nep-hpe and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:mtl:montec:10-2013

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