Macroeconomics 5th Edition by Olivier Blanchard

Exercise 7

Gaines, precommitment, and time inconsistency in the news
Current events offer abundant examples of disputes in which the parties are involved in a game, try to commit themselves to lines of action in advance, and face issues of time inconsistency. Examples arise in the domestic political process, international affairs, and labor-management relations.
a. Choose a current dispute (or one resolved recently) to investigate. Do an Internet search to learn the issues involved in the dispute, the actions taken by the parties to date, and the current state of play.
b. In what ways have the parties tried to precommit to certain actions in the future Do they face issues of time inconsistency Have the parties failed to carry out any of their threatened actions
c. Does the dispute resemble a prisoner's dilemma game (a game with a payoff structure like the one described in problem 6) In other words, does it seem likely (or did it actually happen) that the individual incentives of the parties will lead them to an unfavorable outcome-one that could be improved for both parties through cooperation Is there a deal to be made What attempts have the parties made to negotiate
d. How do you think the dispute will be resolved (or how has it been resolved)