A commitment folk theorem

Real world players often increase their payoffs by voluntarily committing to play a fixed strategy, prior to the start of a strategic game. In fact, the players may further benefit from commitments that are conditional on the commitments of others. This paper proposes a model of conditional commitments that unifies earlier models while avoiding circularities that often arise in such models. A commitment folk theorem shows that the potential of voluntary conditional commitments is essentially unlimited. All feasible and individually rational payoffs of a two-person strategic game can be attained at the equilibria of one (universal) commitment game that uses simple commitment devices. The commitments are voluntary in the sense that each player maintains the option of playing the game without commitment, as originally defined.