Collective commitment

Christian Roessler, Sandro Shelegia, Bruno Strulovici

Research output: Contribution to journalArticlepeer-review

Abstract

We consider collective decisions made by agents whose preferences and power depend on past events and decisions. Faced with an inefficient equilibrium and an opportunity to commit to a policy, can the agents reach an agreement on such a policy? We provide a consistency condition linking power structures in the dynamic setting and at the commitment stage. When the condition holds, commitment has no value: any agreement that may be reached at the outset coincides with the equilibrium without commitment. When the condition fails, as in the case of time-inconsistent preferences, commitment can improve outcomes. We discuss several applications.

Original languageEnglish (US)
Pages (from-to)347-380
Number of pages34
JournalJournal of Political Economy
Volume126
Issue number1
DOIs
StatePublished - Feb 2018

ASJC Scopus subject areas

  • Economics and Econometrics

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