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A Theory of Endogenous Commitment
The Review of Economic Studies
Commitment is typically modeled by assigning to one of the players the ability to take an initial binding action. The weakness of this approach is that the fundamental question of who has the opportunity to commit cannot be addressed, as it is assumed. This paper presents a framework in which commitment power arises endogenously from the fundamentals of the model. We construct a finite dynamic game in which players are given the option to change their minds as often as they wish, but pay adoi:10.1111/j.1467-937x.2007.00470.x fatcat:2zmd64xdwndsherpu234trccdq