Reversibility In Dynamic Coordination Problems

Agents at the beginning of a dynamic coordination process are uncertain about actions of their fellow players and anticipate receiving strategically relevant information later on in the process. In such environments, the (ir)reversibility of early actions plays an important role in the choice among them. The authors characterize the strategic effects of the reversibility option on the coordination outcome. Such an option can either enhance or hamper efficient coordination, and they determine the direction of the effect based only on simple features of the coordination problem.