Introduction to the Evolution of Preferences
The strategy T strictly dominates B, and R is a strict best response to T. The game thus has a unique rationalizable outcome and hence a unique Nash equilibrium, given by (T, R). Normal-form games are commonly interpreted as describing situations in which strategy choices are effectively simultaneous, in the sense that each player must choose without knowing the other's choice. Suppose, however, that before the game is played Player 1 (the row player) could commit to playing B instead of T and could make this commitment known to Player 2. Player 2 would respond by choosing her best response, L, leading to (B, L), an outcome that Player 1 prefers to the Nash equilibrium (T, R). The observation that players can gain by making commitments is a familiar one, beginning with Stackelberg's ([20], translated in Peacock [15]) analysis of commitment by a duopolist and continuing with Schelling's [18] discussion of commitment in The Strategy of Conflict. Early theories of bargaining, including Binmore [1] and Crawford and Varian [3], explore the benefits of commitment more formally, as does Frank [5]. doi:10.1006 jeth.2000.2753, available online at http: www.idealibrary.com on