- Thinking Strategically (Avinash Dixit and Barry
Nalebuff), Chapter 6, Credible Commitments
A threat that is not credible is useless.
The side that can make the biggest threat wins.
Topics That Might be Discussed in Class
- Eight Ways to Build Credibility
- Reputation: tax amnesty, hijackers, Mayflower no-sale policy,
the Madman Theory (Nixon)
- Contracts and renegotiation: sales contracts, marriage
- Cut off communication: mailing checks without a stamp
- Burning your bridges: Cortez, Polaroid.
- Leaving the decision to chance: The Doomsday Device
- Move in small steps: house contractor contracts
- Teamwork: honor codes, ostracism
- Mandated agents: labor union leaders
Burning your bridges,
The renegotiation problem,
- Two examples of
sadaqs used in Islamic marriages.
- The powerpoint slides I used in
- ``Lifting the Veil of Ignorance: Personalizing the Marriage
Contract,'' (Eric Rasmusen and Jeffrey Stake,Indiana Law
Journal, (Spring 1998) 73: 454-502. ). We argue that the law
should clearly permit
parties to contract for more restrictive forms of marriage, because
some people would like that commitment to a longterm contract.
For Next Time
- Packet: Besanko, David, David Dranove and Mark Shanley,
``Strategic Commitment and Competition,'' pp. 319-348 of The
Economics of Strategy, New York: John Wiley and Sons, 1996.
Return to the Thinking Strategically Home
Page at http://pacioli.bus.indiana.edu/erasmuse/g570/g570.htm.
Send comments to Prof.
. Last updated:March 22, 2002.