Games with Imperfectly Observable Commitment

1claims that, in models of commitment, “the first-mover advantage is eliminated when there is aslightamount 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 of7with elements from the theory of6, actually selects this “noisy Stackelberg equilibrium.”Journal of Economic LiteratureClassification Number: C72.