Commitment Power Research Articles

Product Upgrades and Posted Prices

We consider the dynamic pricing problem of a durable good monopolist with full commitment power, when a new version of the good is expected at some point in the future. The new version of the good is superior to the existing one, bringing a higher ow utility. If the arrival is a stationary stochastic process, then the corresponding optimal price path is shown to be constant for both versions of the good, hence there is no delay on purchases and time is not used to discriminate over buyers, which is in line with the literature. However, if the arrival of the new version occurs at a commonly known deterministic date, then the optimal price path may be decreasing over time, resulting in delayed purchases. For both stochastic and deterministic arrival processes, posted prices is not the optimal mechanism, which on the other hand, involves into bundling of both new and old versions of the good and selling them only together.

Pooling with Essential and Nonessential Patents

Several recent technological standards were accompanied by patent pools—arrangements to license relevant intellectual property as a package. A key distinction made by regulators—between patents essential to a standard and patents with substitutes—has not been addressed in the theoretical literature. I show that pools of essential patents are always welfare increasing, while pools which include nonessential patents can be welfare reducing—even pools limited to complementary patents and stable under compulsory individual licensing. If pools gain commitment power and price as Stackelberg leaders, this reduces, and can reverse, the gains from welfare-increasing pools. (JEL D43, D45, K21, L13, L24, O34)

A New Reading of an Old Text in Eastern Europe: John Steinbeck’s In Dubious Battle

Although rich in artistry and depth, Steinbeck’s novel In Dubious Battle (1936) has been judged less as a novel and more as a sociological event or a propagandistic political tract. At least contemporary critics are inclined to treat the book as a legitimate work of art, to be approached from a variety of the usual aesthetic and theoretical angles. However, no matter which lens In Dubious Battle is viewed through, it is certainly a mistake to attribute the novel’s enduring appeal and value to its depiction of a migrant apple pickers’ strike typical of the 1930s. In its concern with the human dilemmas regarding the nature of power, personal freedom, and degree of responsibility and commitment, it is as powerful today as it was when it was written.

Does laboratory trading mirror behavior in real world markets? Fair bargaining and competitive bidding on eBay

Laboratory market experiments observe a sharp dichotomy between (selfish) competitive behavior and fair-minded social behavior depending on competitive conditions. While the dichotomy is consistent with social preference theory, the often advanced hypothesis that social behavior is an artifact of laboratory conditions has not heretofore been ruled out. We tested these competing hypotheses in a field experiment on eBay conducted with experienced traders. The buyer behavior we observe strongly confirms the social preference hypothesis. Also, the behavioral patterns in the field experiment mirror fully naturally occurring trading patterns in the market. For instance, some sellers do not use their commitment power as predicted by theories of both selfish and social behavior, with the pattern of deviation reflecting traders’ market experience outside the experiment.

Bargaining with Deadlines and Private Information

We study dynamic bargaining with private information and a deadline. As commitment power disappears, there is a clear “deadline effect.” That is, trade takes place smoothly before the deadline and with an atom right at the deadline. Prices, timing of trade, and the deadline effect respond to the consequences of not reaching an agreement. Bleaker disagreement options lead to more trade and proportionally more of the agreements taking place on the verge of the deadline. Time to deadline can affect the overall efficiency of the equilibrium nonmonotonically. For intermediate deadlines, efficiency is improved if agents face bleaker prospects after deadline. (JEL C78, D82)

Open source leadership

Purpose – The study had three main aims. To better understand and explain commitment dynamics using a commitment based analytical model. To show that commitment is an essential foundation of synergistic interactions which drive the speed of response to environmental change. To explain why and under what circumstances people in social networks become committed to a common cause. How this leads to authentic identity creation and how both lead successful outcomes. Design/methodology/approach – The fieldwork for the study was qualitative and interpretive in nature and used semi-structured interviews to collect the data. As a consequence, the approach was mindful of issues of reflexivity wherein it is acknowledged that the researcher-respondent are conjoined in a sense-making process which is unavoidable and inevitable. It proceeded in three phases: sampling of the case, data gathering, and data analysis. One case was selected in order to increase the depth of the analysis, acquire and report experience with the gathering of new and unfamiliar data. Findings – The findings suggest that commitment based community networks are primarily driven by concerns. The study shows that in order to shift the concerns of a culture, community network leaders must clearly articulate and gain “buy in” to the concerns to be addressed. They must create and maintain a clear focus and develop a shared sense of commitment among participants. The research reveals a complex interaction between the commitment drivers and the successful outcomes of the project especially the unfolding and alteration of commitments in time and through time at the strategic, transforming and operating levels as circumstances change. Research limitations/implications – Being qualitative and interpretive in nature, the approach is limited by issues of reflexivity wherein it is acknowledged that the researcher-respondent are conjoined in a sense-making process. While this is unavoidable and inevitable, the findings from this study have implications for research into the impact of community based networking strategies on strategic management because so much strategic planning in business is preoccupied by public reputation. Practical implications – In taking the position that personal and corporate identity is neither wholly the result of total commitment nor wholly the result of recognition-based identity, the practical implications require a deeper consideration of the challenges surrounding collaborative community models. Because language is used loosely, requests can be made ambiguously and commitments frivolously. The inevitable result is a total breakdown in trust. Originality/value – This work is highly original because it points to the obvious which few leaders and managers appear to take into account. In those cases where the power of language and commitment are considered, the results are highly positive.

Do feelings matter? The effects of intrinsic benefits on individuals’ commitment toward knowledge systems

Knowledge management systems have been shown to increase creativity and innovation in the workplace. This study aims to find out if and how feelings matter in individuals’ knowledge management practices in knowledge-intensive firms. We develop and test a research model that explores the effects of intrinsic benefits (knowledge self-efficacy and perceived self-worth) on users’ commitment to knowledge systems. Theoretically grounded in the three-component model of commitment, the research model tests the relationships between the intrinsic benefit constructs and the affective, continuance, and normative dimensions of commitment. Survey results of 78 accounting professionals from both public and corporate accounting fields found support for the research model. Knowledge self-efficacy is positively associated with affective and continuance commitment. Perceived self-worth is positively related with affective and normative commitment. Knowledge self-efficacy significantly influences individuals’ perceived self-worth. This study raises implications for researchers and practitioners interested in commitment in knowledge management for creativity generation and particularly for knowledge-intensive firms on how to tap into the power of commitment and intrinsic benefits to gain and sustain a competitive advantage.

Finding optimal strategies in a multi-period multi-leader–follower Stackelberg game using an evolutionary algorithm

Stackelberg games are a classic example of bilevel optimization problems, which are often encountered in game theory and economics. These are complex problems with a hierarchical structure, where one optimization task is nested within the other. Despite a number of studies on handling bilevel optimization problems, these problems still remain a challenging territory, and existing methodologies are able to handle only simple problems with few variables under assumptions of continuity and differentiability. In this paper, we consider a special case of a multi-period multi-leader–follower Stackelberg competition model with non-linear cost and demand functions and discrete production variables. The model has potential applications, for instance in aircraft manufacturing industry, which is an oligopoly where a few giant firms enjoy a tremendous commitment power over the other smaller players. We solve cases with different number of leaders and followers, and show how the entrance or exit of a player affects the profits of the other players. In the presence of various model complexities, we use a computationally intensive nested evolutionary strategy to find an optimal solution for the model. The strategy is evaluated on a test-suite of bilevel problems, and it has been shown that the method is successful in handling difficult bilevel problems.

Low-ball and compliance: Commitment even if the request is a deviant one

Low-balling is a technique designed to gain compliance by making a very attractive initial offer to induce a person to accept the offer and then making the terms less favorable. Studies have shown that this approach is more successful than when the less favorable request is made directly. However, the effect of this technique on more problematic and costly requests remained in question. In two experimental field studies, a request was made to participants and, after agreeing, they were informed that the request referred to deviant behaviors. Results showed that the low-ball technique remained effective with both men and women. The theoretical power of commitment is discussed to explain these results.

Dynamic Screening with Limited Commitment

We examine a model of dynamic screening and price discrimination in which the seller has limited commitment power. Two cohorts of anonymous, patient, and risk-neutral buyers arrive over two periods. Buyers in the first cohort arrive in period one, are privately informed about the distribution of their values, and then privately learn the value realizations in period two. Buyers in the second cohort are last-minute shoppers that already know their values upon their arrival in period two. The seller can fully commit to a long-term contract with buyers in the first cohort, but cannot commit to the future contractual terms that will be offered to second-cohort buyers. The expected second-cohort contract serves as an endogenous type-dependent outside option for first-cohort buyers, reducing the seller's ability to extract rents via sequential contracts. We derive the seller-optimal equilibrium and show that, when the seller cannot condition on future contractual terms (either explicitly or implicitly), she endogenously generates a commitment to maintaining high future prices by manipulating the timing of contracting.

The Informative Power of Treaty Commitment: Using the Spatial Model to Address Selection Effects

The effects of international institutions on state behavior make up a key research agenda in international‐relations scholarship. Because states self‐select into treaties, we cannot infer that these commitments have causal effects unless we address this selection effect. I explain the significant limitations of the methods used thus far to overcome this problem and argue that a more effective approach must take into account states’ treaty preferences. I describe a novel combination of ideal‐point estimation and propensity‐score matching that can estimate the probabilities of treaty commitment and use them to test hypotheses. I use this procedure to test the effects of three key international human‐rights treaties. My results provide significant new findings regarding the effects of these important agreements. I show that the Convention on the Elimination of All Forms of Discrimination against Women has significantly improved respect for women's rights, but that the Convention against Torture and the International Covenant on Civil and Political Rights have not had significant effects on human rights.

Beyond Trade Costs: Firms’ Endogenous Access to International Markets

In this paper, we explore another factor besides trade costs that can affect firms’ exports: strategic interaction between firms in R&D investment. Three results can be highlighted. First, the volume of trade is higher in the presence of R&D than in the absence of it, given that R&D reduces marginal costs. Second, like with reductions in trade costs, international trade grows with increases in the return on R&D, since technological progress enhances firms’ competitiveness. Third, when firms differ in commitment power in R&D, the R&D leader plays strategically in R&D in order to become more competitive and to be more active in international markets than the R&D follower.

The Informative Power of Treaty Commitment: Using the Spatial Model to Address Selection Effects

The effects of international institutions on state behavior make up a key research agenda in international relations scholarship. Because states self-select into treaties, we cannot infer that these commitments have causal effects unless we address this selection effect. I explain the significant limitations of the methods used thus far to overcome this problem and argue that a more effective approach must take into account states' treaty preferences. I describe a novel combination of ideal point estimation and propensity score matching that can estimate the probabilities of treaty commitment and use them to test hypotheses. I use this procedure to the test the effects of three key international human rights treaties. My results provide significant new findings regarding the effects of these important agreements.

Building commitment through reflective practice: an inside‐out approach

PurposeThe purpose of this paper is to (re)introduce the concept of Community of Commitment and Practice (CoCP) and to discuss the types of learning that occur in the process. It describes the differences between CoCP and the commonly‐known Community of Practice (CoP), emphasizing the power of commitment as crucial for organizational development.Design/methodology/approachA Singapore case study was used as a basis for identifying the conceptual and practical relevance of CoCP to organizational practice. A literature review based on relevant concepts provides the theoretical perspective for understanding the occurrence of learning in organizational contexts.FindingsCoCP promotes reflective action learning and reflective action taking driven by an inside‐out approach. Intrinsic learning is largely influenced by the intent and motivation of individuals rather than a top‐down (outside‐in) approach.Practical implicationsThe reflective inquiry and collaborative learning process of CoCP help build individuals as agents of change as they not only seek to do things differently but also influence others to make the organization a better workplace. In turn, they become reflective practitioners as they view constraints as opportunities for further learning to achieve specific outcomes.Originality/valueThe usefulness of CoCP is supported by relevant research and its impact on organizations is wide ranging. The paper elucidates an integrative perspective of the CoCP processes, providing a roadmap for developing the learning organization.

The (Soft) Power of Commitment: The EU and Conflict Resolution in Northern Ireland

This paper examines the potential of international actors to contribute to conflict resolution by analysing the evolving role of the European Union (EU) in embedding Northern Ireland's peace process. Scrutiny of the EU's approach to conflict resolution in Northern Ireland offers useful insights into the scope and potential of soft power for facilitating behavioural change from governmental to grass-roots levels. This paper traces the development of the EU's approach to conflict resolution in Northern Ireland from one concentrated on encouraging state-level agreement, to nurturing peace through multilevel funding, through now to consolidating the peace by facilitating regional-level empowerment. The core argument is that, in sum, the most critical element of the EU's contribution to peace in Northern Ireland has been, quite simply, that of enduring commitment.

Criminal Law Standards in Civil Commitment

The history of the hospitalization of persons with mental disorders has progressed in distinct stages over the course of the past two centuries. From Philippe Pinel's introduction of moral treatment principles, through the advent of professional psychiatry as a result of Sigmund Freud's innovations, through the move toward deinstitutionalization enabled by the discovery of new psychiatric medications, the groundwork was laid for the fourth and most recent of what can be seen as “revolutions” in institutional mental health care: the focus of both law and medicine on the parameters of the state's commitment power. This article addresses the function of the criminal procedure model in the context of civil commitment, its practical effects, and opportunities for continued reform.

Techno-Economical Unit Commitment Using Harmony Search Optimization Approach

Abstract -In this paper, Security-Constrained Unit Commitment (SCUC) model is proposed in a restructured power system. This model consists of a closed-loop modified Unit Commitment (UC) and Security-constrained Optimal Power Flow (SCOPF). The objective of this SCUC model is to obtain the maximum social welfare-based system operating cost while maintaining the system security. In conventional power systems, the demand was forecasted before market operation and determined as a fixed constant. Supplying this demand was therefore considered as a constraint. However, in restructured power system which is based on Standard Market Design (SMD), DISCOs offer the demand and their proposed prices; therefore the demand is modeled as an elastic load. Independent System Operator (ISO) is responsible for operating the power market. The ISO performed the power market using the SCUC software to obtain feasible and economical operation as much as possible. In this paper, Harmony Search Algorithm (HSA) has been implemented to solve SCUC problem. Since the SCUC problem is a non-linear, mixed integer, large scale and non-convex problem, harmony search optimization is addressed as an efficient technique to overcome the aforementioned challenges. The simulation results show that the presented method is both satisfactory and consistent with expectation.

Durable goods produced by state owned enterprises

A two-period durable-goods monopoly model is analyzed where the durable good is provided by a state owned enterprise (SOE). First, we suppose that the SOE is under pressure to provide employment, and therefore has an employment goal, as well as the traditional profit and consumer surplus objectives. Assuming that the SOE has difficulty committing to current buyers with respect to its profit and employment motives, we find that as the employment burden increases, the SOE tends to move further away from the efficient durability and provides a lower durability level than a pure profit maximizer. Additionally, we show that a durable-goods SOE without commitment power, will wish to partially privatize to help mitigate its commitment problem with buyers and increase social welfare. Both of these findings provide economic rationale for the partial privatization of SOEs in transitioning economies that have not been identified in the literature prior to this.

Project Design with Limited Commitment and Teams

We study the interaction between a group of agents who exert costly effort over time to complete a project, and a manager who chooses the objectives that must be met in order for her to sign off on it. The manager has limited commitment power so that she can commit to the requirements only when the project is sufficiently close to completion. This is common in projects that involve design or quality objectives, which are difficult to define far in advance. The main result is that the manager has incentives to extend the project as it progresses: she is time-inconsistent. This result has two implications. First, the manager will choose a larger project if she has less commitment power. Second, if the agents receive a fraction of the project's worth upon its completion, then the manager should delegate the decision rights over the project size to the agents unless she has sufficient commitment power. In this case, the agents will choose a smaller project than is optimal for the manager, but their preferences are time-consistent.

Strategic Ability Updating in Concurrent Games by Coalitional Commitment.

Strategic ability updating relates to establishing some required properties, which can be expressed by strategic abilities, in a multicomponent reactive system. We model such a reactive system as a concurrent game structure (CGS), which is the semantic model of Alternating-time Temporal Logic (ATL). Then, we propose coalitional commitment as a tool for achieving the required strategic ability updating. Intuitively, a coalitional commitment can extend the state space of a CGS by a context function and then delete some transitions by a coalitional normative system (CNS). We propose coordinated ATL (co-ATL) for reasoning about strategic abilities in the structures obtained from a CGS by implementing a CNS. The model-checking problem for co-ATL is proved to be PTIME-complete, just like that of ATL, and is thus tractable. Then, we characterize the limitation of coalitional commitment power by identifying the set of co-ATL formulas whose satisfaction cannot be established and the set of co-ATL formulas whose satisfaction cannot be avoided. Afterward, we show that the effectiveness problem, feasibility problem, and synthesis problem for coalitional commitment are PTIME-complete, NP-complete, and FNP-complete, respectively. Finally, we treat the coalitional commitment synthesis problem as an extended planning problem and present an algorithm based on the planning as model checking paradigm. Our work can be seen as an improvement for both social law research and planning via model checking research.