Coordinating by Not Committing: Efficiency as the Unique Outcome
Rohan Dutta*, Ryosuke Ishii
Last modified: 2014-04-05
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 stag hunt 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.
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 stag hunt 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.