Review of Economic Studies Vol. 58 No. 2 1991
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.
- DOI
- 10.2307/2297967
- Volume
- 58
- Issue
- 2
- Pages
- 259
- Sources
- bibtex:phds-export.bib openalex crossref