New equilibrium concept resolves time inconsistency problem in economic models.
The article introduces a new idea called organizational equilibrium to solve problems in models with time-inconsistent variables. By allowing agents to restart and wait for others, the equilibrium gradually shifts towards a better outcome over time. This concept was applied to a growth model and fiscal policy, showing that the allocation improves slowly but doesn't reach the best possible result. This gradual improvement suggests that building trust and goodwill takes time and is valuable in the long run.