Gradualism and irreversibility
UNSPECIFIED (2002) Gradualism and irreversibility. REVIEW OF ECONOMIC STUDIES, 69 (2). pp. 339-356. ISSN 0034-6527Full text not available from this repository.
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|
|Number of Pages:||18|
|Page Range:||pp. 339-356|
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