Games with imperfectly observable commitment

Abstract 1 claims that, in models of commitment, “the first-mover advantage is eliminated when there is a slight amount of noise associated with the observation of the first-mover's selection.” We show that the validity of this claim depends crucially on the restriction to pure strategy equilibria. The game analyzed by Bagwell always has a mixed equilibrium that is close to the Stackelberg equilibrium when the noise is small. Furthermore, an equilibrium selection theory that combines elements from the theory of 7 with elements from the theory of 6 , actually selects this “noisy Stackelberg equilibrium.” Journal of Economic Literature Classification Number: C72.