Commitment Problems

This lecture delves deeper into the idea of a credible promise.

Takeaway points:
  1. Players can only commit to moves they are willing to follow through on when the time comes.
  2. The inability for a player to credibly commit to a certain action may leave both sides worse off than if that player could credibly commit to that action. We call this a commitment problem.
  3. Think twice before you consent to a police search.

Next lesson: The Centipede Game.
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