Bargaining Game, Principal Agent
The Founder's Deed
The Founder's Deed is a Bargaining Game and Principal Agent scenario. The core lesson: A rule that is hard to change is valuable precisely because it is hard to change, and costly for the same reason once circumstances move. You are a prosperous merchant in a city under a ruler whose treasury is often empty. Your wealth is visible: warehouses, shops, a stretch of orchards outside the walls. DecisionPlay maps the players, payoffs, and equilibrium dynamics that shape how this situation typically resolves.
The situation
You are a prosperous merchant in a city under a ruler whose treasury is often empty. Your wealth is visible: warehouses, shops, a stretch of orchards outside the walls. Everyone in your position knows what can happen to visible wealth when a campaign needs funding. Islamic law offers you an instrument. You can endow property as a waqf, writing a deed that dedicates its income in perpetuity to a purpose you choose, a fountain, a school, a kitchen for the poor, and naming an administrator bound to follow your terms. What you give up is the right to change your mind. What you gain is an asset that is no longer straightforwardly yours to seize, and a service the neighborhood will defend. Your sons are asking what happens to them. Your scribe is waiting to write down exactly how specific your instructions should be.
Background
The waqf was the principal legal vehicle for endowed public services across much of the Muslim world for centuries, funding mosques, schools, fountains, hospitals and travelers' lodgings. The economist Timur Kuran has argued that its design carried both its strength and its long-run costs: perpetuity and a binding founder's deed made the commitment credible, and the same features limited how far the assets could later be redeployed. The paired brief carries the sourced argument and the scholarly disagreement around it. This scenario puts you at the moment the deed is written.
What this reveals
Commitment buys protection by removing your own options
A promise that you could revoke is worth little to anyone deciding whether to rely on it. Binding yourself is what makes the promise carry weight, whether the audience is a ruler eyeing your property or a community deciding whether to defend an institution. The cost arrives later and lands on someone else: the same immovability that protected the asset prevents its redeployment when the world changes, and the pressure then goes into workarounds, courts, and quiet non-compliance.
How to counter it: When you design a commitment, ask what would have to change for it to become wrong, and decide in advance who is allowed to notice and by what procedure. An escape hatch weakens the commitment, and no escape hatch guarantees that the escaping happens off the books.
A question to sit with
What have you deliberately made hard to reverse, and who would have to agree before it could be revisited?
Frequently asked questions
- What game theory concept does The Founder's Deed illustrate?
- The Founder's Deed illustrates Bargaining Game, Principal Agent. A rule that is hard to change is valuable precisely because it is hard to change, and costly for the same reason once circumstances move.
- What is the situation in The Founder's Deed?
- You are a prosperous merchant in a city under a ruler whose treasury is often empty. Your wealth is visible: warehouses, shops, a stretch of orchards outside the walls. Everyone in your position knows what can happen to visible wealth when a campaign needs funding.
- What does The Founder's Deed reveal about how people decide?
- Commitment buys protection by removing your own options. A promise that you could revoke is worth little to anyone deciding whether to rely on it. Binding yourself is what makes the promise carry weight, whether the audience is a ruler eyeing your property or a community deciding whether to defend an institution. The cost arrives later and lands on someone else: the same immovability that protected the asset prevents its redeployment when the world changes, and the pressure then goes into workarounds, courts, and quiet non-compliance.
- How do you avoid the trap in The Founder's Deed?
- When you design a commitment, ask what would have to change for it to become wrong, and decide in advance who is allowed to notice and by what procedure. An escape hatch weakens the commitment, and no escape hatch guarantees that the escaping happens off the books.
- What is the research behind The Founder's Deed?
- The waqf was the principal legal vehicle for endowed public services across much of the Muslim world for centuries, funding mosques, schools, fountains, hospitals and travelers' lodgings. The economist Timur Kuran has argued that its design carried both its strength and its long-run costs: perpetuity and a binding founder's deed made the commitment credible, and the same features limited how far the assets could later be redeployed. The paired brief carries the sourced argument and the scholarly disagreement around it.
- How long does The Founder's Deed take to play?
- About 7 min, at core difficulty, across 3 decision points. It runs in your browser with no account and no sign-in.
Keep exploring
More Historical Perspective scenarios, or browse all scenarios. New to this? Start with how DecisionPlay works or the game theory glossary.
Topics: commitment, institutions, public-goods, waqf, principal-agent, history