UNSPECIFIED (2002) Gradualism and irreversibility. REVIEW OF ECONOMIC STUDIES, 69 (2). pp. 339-356. ISSN 0034-6527

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Abstract

This paper considers a class of two-player dynamic games in which each player controls a one-dimensional action variable, interpreted as a level of cooperation. The dynamics are due to an irreversibility constraint: neither player can ever reduce his cooperation level. Payoffs are decreasing in one's own action, increasing in one's opponent's action. We characterize efficient symmetric equilibrium action paths; actions rise gradually over time and converge, when payoffs are smooth, to a level strictly below the one-shot efficient level, no matter how little discounting takes place. The analysis is extended to incorporate sequential moves and asymmetric equilibria.

Item Type:	Journal Article
Subjects:	H Social Sciences > HC Economic History and Conditions
Journal or Publication Title:	REVIEW OF ECONOMIC STUDIES
Publisher:	REVIEW OF ECONOMIC STUDIES LTD
ISSN:	0034-6527
Date:	April 2002
Volume:	69
Number:	2
Number of Pages:	18
Page Range:	pp. 339-356
Publication Status:	Published
URI:	http://wrap.warwick.ac.uk/id/eprint/10639

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