Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/142003
Authors: 
Roessler, Christian
Shelegia, Sandro
Strulovici, Bruno
Year of Publication: 
2015
Series/Report no.: 
CSIO Working Paper 0129
Abstract: 
We consider collective decisions made by agents whose preferences and power depend on past events and decisions. Faced with an ineffcient 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.
JEL: 
D70
H41
C70
Document Type: 
Working Paper

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