A generalized model of commitment

✍ Scribed by Scott Drewianka

• Publisher: Elsevier Science
• Year: 2006
• Tongue: English
• Weight: 322 KB
• Volume: 52
• Category: Article
• ISSN: 0165-4896
• DOI: 10.1016/j.mathsocsci.2006.03.010

✦ Synopsis

The durability of economic relationships, such as employment or family relationships, is influenced by agents' willingness to "commit" by making match-specific investments or arrangements. This paper shows that many properties of optimal decisions and comparative statics in such models are quite robust, emerging from the abstract structure of commitment decisions rather than specific assumptions about functional or distributional forms. Recognizing this structure should enable future research to consider a broader set of empirically relevant complexities and may help to identify promising explanations for variations in commitment. The exercise also clarifies the circumstances under which increased uncertainty increases or decreases commitment.