Sequential Commitment Games

Abstract: We study an implementation problem of Pareto efficiency as a subgame perfect equilibrium outcome in extensive form games, faced by a mediator who is ignorant about the payoff structure of the game. We introduce a novel class of sequential commitment games, where players make voluntary unconditional commitments in a prescribed order. Our main result is surprisingly positive: We show that a particular type of order can implement a Pareto efficient outcome in every such two-player game structure regardless of the actual payoffs. We also show an impossibility result for the case of four players or more.