The Limits of Limited Commitment

64 Pages Posted: 13 May 2022 Last revised: 30 Apr 2024

See all articles by Jacopo Bizzotto

Jacopo Bizzotto

Oslo Business School - OsloMet

Toomas Hinnosaar

University of Nottingham - School of Economics

Adrien Vigier

University of Oxford - Department of Economics

Date Written: April 30, 2024

Abstract

We study limited strategic leadership. A collection of subsets covering the leader's action space determine her commitment opportunities. We characterize the outcomes resulting from all possible commitment structures of this kind. If the commitment structure is an interval partition, then the leader's payoff is bounded by her Stackelberg and Cournot payoffs. However, under more general commitment structures the leader may obtain a payoff that is less than her minimum Cournot payoff. We apply our results to study information design problems in leader-follower games where a mediator communicates information about the leader's action to the follower.

Keywords: commitment, Stackelberg, Cournot, information design

JEL Classification: C72, D43, D82

Suggested Citation

Bizzotto, Jacopo and Hinnosaar, Toomas and Vigier, Adrien, The Limits of Limited Commitment (April 30, 2024). Available at SSRN: https://ssrn.com/abstract=4106613 or http://dx.doi.org/10.2139/ssrn.4106613

Jacopo Bizzotto

Oslo Business School - OsloMet ( email )

Pilestredet 35
Oslo, 0166
Norway

Toomas Hinnosaar

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

Adrien Vigier (Contact Author)

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

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