Economics Game Theory In Behavioral Economics Questions
The role of commitment in bargaining games is to create a credible threat or promise that influences the behavior of the negotiating parties. When a player commits to a certain action or strategy, it signals their determination to follow through with it, even if it may not be in their immediate best interest. This commitment can influence negotiation outcomes by altering the incentives and expectations of the other players, leading to more favorable terms for the committed player. It can also help overcome issues of trust and uncertainty, as the commitment provides a level of assurance to the other party. Overall, commitment in bargaining games can shape the dynamics of negotiations and potentially lead to more favorable outcomes for the committed player.