Arbeitspapier

Threats Without Binding Commitment

This paper explores the power of threats in the absence of binding commitment. The threatener cannot commit to carry out the threat if the victim refuses payment, and cannot commit not to carry out the threat if payment is made. If exercising the threat is costly to the threatener, then the threat cannot succeed in extracting money from the victim. If exercising the threat would benefit the threatner, however, then the threat's success depends upon whether the threat may be repeated. In the equilibrium of a finite-period game, the threat is carried out and the victim makes no payments. In an infinite-horizon game, however, it is an equilibrium for the victims to make a stream of payments over time. The expectation of future payments keeps the threatener from exercising the threat.

Sprache
Englisch

Erschienen in
Series: Discussion Paper ; No. 1139

Klassifikation
Wirtschaft

Ereignis
Geistige Schöpfung
(wer)
Shavell, Steven
Spier, Kathryn
Ereignis
Veröffentlichung
(wer)
Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science
(wo)
Evanston, IL
(wann)
1995

Handle
Letzte Aktualisierung
10.03.2025, 11:45 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Shavell, Steven
  • Spier, Kathryn
  • Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science

Entstanden

  • 1995

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