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The existence of the plausible threat from the sovereign in turn makes promise keeping rational.
Then for any γ ∈ [ (C h − C l ) / V, (C h − C l ) / q l V ] the expert makes promise SQ and exhibits type- 2 behavior after acceptance.
Since type-1 equilibrium involves rejection while type-2 equilibrium entails profitable trade, the model predicts that the expert makes promise SQ and that he exhibits type-2 behavior after acceptance.
□ Proposition 2b Suppose promises are believed and believed to be believed in game Γ P. Then the expert either makes promise SQ or promise AP and each of those promises is accepted by the consumer.
The expertʼs behavior after acceptance of promise p ∈ { NO, AP, SQ, SQ & AP } is as shown in Fig. 3. Suppose promises are believed and believed to be believed in game Γ P. Then the expert either makes promise SQ or promise AP and each of those promises is accepted by the consumer.
In this range SQ selects the type-2 equilibrium, while AP selects the type-1 equilibrium; since type-1 equilibrium involves rejection while type-2 equilibrium entails profitable trade, the model predicts that the expert makes promise SQ and that he exhibits type-2 behavior after acceptance.
Similar(54)
"Grillo makes promises like Berlusconi".
"He only makes promises he can keep.
Becky makes promises, then breaks them.
When he makes promises to us, he keeps his word.
Rather, it makes promises it can't keep.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com