www.lesswrong.com/posts/zk6TiByFRyjETpTAj/economic-efficiency-often-undermines-s...

This sentence is inaccurate because credible threats and commitment are already standard topics inside economics, especially in game theory and bargaining theory.

• The Nobel biography for economist Thomas Schelling says his work in game theory focused on strategic activities such as “promises and threats” and on how actors “committed themselves credibly.” That is the opposite of economics ruling out such dynamics.
• A Cambridge University Press game theory text has an entire chapter titled “Non-credible threats, subgame perfect equilibrium and backward induction.” Subgame-perfect equilibrium is a standard economic solution concept used specifically to distinguish credible from non-credible threats.
• A Cambridge University Press bargaining-theory chapter says that in many bargaining situations players take actions that partially commit them to bargaining positions, and it treats this as a normal part of the bargaining literature.

So while some simplified economic models ignore commitment or threats, it is false to say economic frameworks therefore rule them out in general.

This claim is too strong. Mainstream bargaining theory has already accounted for threats and the incentives to make them.

Evidence:

• Cambridge University Press’s Bargaining Theory with Applications describes itself as a unified treatment of the modern bargaining-theory literature and says that topics such as “inside options, commitment tactics” and repeated bargaining receive extensive treatment.
• The book’s chapter “Commitment Tactics” explains that in many bargaining situations players take actions that partially commit them to strategically chosen positions, explicitly discussing the role of threats in bargaining.
• A Journal of Economic Behavior & Organization article titled “Threats and promises in bargaining” states in its abstract that bargainers may want to “threaten to reject low offers” or make promises, and analyzes how the timing of commitment attempts affects those incentives.

That does not mean every bargaining model handles threat incentives perfectly. But it does mean the literature has not simply failed to account for them.