It requires credible commitment to not increasing tax

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Unformatted text preview: g bonds.  ­Citizens have three different options:  ­Exit, Voice, and Loyalty  ­Revolution is very costly and the monarchs and citizens want to avoid that. Voice and Loyalty. Credible commitment  ­So a monarch needs to convince citizens to stay in the country.  ­It requires credible commitment to not increasing tax suddenly and unfairly, or to paying back the bonds he issued.  ­What is it that an action is credibly committed?  ­Making a policy or a promise. (has to be credible) Credible Commitment  ­Credible commitment is difficult in:  ­Time inconsistency.  ­Power asymmetry.  ­Online buying u expect what you buy to be delivered so you need the seller to be credible.  ­You sign a cease ­fire agreement with Bashi...
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