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Joint Projects without Commitment

Joint Projects without Commitment Abstract This paper concerns the pattern of contributions to a joint project when commitments and enforceable contracts are not available. We analyse a game in which partners alternate in making contributions to the project until the project is completed. Contributions are sunk when they are made. The game has a unique subgame perfect equilibrium path, which is inefficient in the sense that socially desirable projects may not be completed. By contrast, in a “subscription game” in which the cost of the contribution is borne only if and when the contributions committed to the project cover its cost, the outcome is efficient. This content is only available as a PDF. © 1991 The Review of Economic Studies Limited http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Review of Economic Studies Oxford University Press

Joint Projects without Commitment

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References (9)

Publisher
Oxford University Press
Copyright
© 1991 The Review of Economic Studies Limited
ISSN
0034-6527
eISSN
1467-937X
DOI
10.2307/2297967
Publisher site
See Article on Publisher Site

Abstract

Abstract This paper concerns the pattern of contributions to a joint project when commitments and enforceable contracts are not available. We analyse a game in which partners alternate in making contributions to the project until the project is completed. Contributions are sunk when they are made. The game has a unique subgame perfect equilibrium path, which is inefficient in the sense that socially desirable projects may not be completed. By contrast, in a “subscription game” in which the cost of the contribution is borne only if and when the contributions committed to the project cover its cost, the outcome is efficient. This content is only available as a PDF. © 1991 The Review of Economic Studies Limited

Journal

The Review of Economic StudiesOxford University Press

Published: Apr 1, 1991

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