Collective Commitment
- Author(s)
- Sandro Shelegia, Christian Rössler, Bruno Strulovici
- 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? Under an intuitive condition linking power structures in the dynamic setting and at the commitment stage, the answer is negative: when the condition holds, the only agreement that may be reached at the outset, if any, coincides with the equilibrium without commitment. The condition is also necessary: when it fails, as in the case of a single time-inconsistent agent, commitment is valuable for some payoffs. We apply our result to explain inefficient collective decisions in the contexts of investment in a public good, hiring, and reform.
- Organisation(s)
- Department of Economics
- External organisation(s)
- California State University, East Bay, Northwestern University
- No. of pages
- 29
- Publication date
- 06-2015
- Austrian Fields of Science 2012
- 502047 Economic theory, 502045 Behavioural economics
- Portal url
- https://ucris.univie.ac.at/portal/en/publications/collective-commitment(8c921f54-572c-4002-a90d-e92dd1c985a3).html