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The B.E. Journal of Theoretical Economics

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Building Reputation in a War of Attrition Game: Hawkish or Dovish Stance?

Selçuk Özyurt
  • Corresponding author
  • Department of Economics, Harvard University, 1805 Cambridge St. Cambridge, MA 02138, USA
  • Faculty of Arts and Social Sciences, Sabancı University, Orhanli Tuzla 34956, Istanbul, Turkey
  • Email:
Published Online: 2016-05-25 | DOI: https://doi.org/10.1515/bejte-2015-0093

Abstract

This paper examines a two-player war of attrition game in continuous-time, where (1) fighting (i. e., escalating the conflict) is costless for a player unless he quits, (2) at any point in time, each player can attack to his opponent and finalize the game with a costly war, (3) there is two-sided uncertainty regarding the players’ resolve, and (4) each player can choose his tone/stance (either hawkish or dovish) at the beginning of the game, which affects his quitting cost. The results imply that choosing hawkish (dovish) regime is optimal if and only if the benefit-cost ratio of the dispute is sufficiently high (low). If hawkish tone is going to give a player upper hand in a dispute, then choosing a more aggressive tone does not increase his payoff. However, choosing a more dovish tone increases a player’s payoff whenever dovish regime is optimal.

Keywords: war of attrition game; continuous time games; reputation; dispute resolution

JEL: C72; D74; D82; D83

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About the article

Published Online: 2016-05-25

Published in Print: 2016-06-01


This research was supported by the Marie Curie International Reintegration Grant (# 256486) within the European Community Framework Programme.


Citation Information: The B.E. Journal of Theoretical Economics, ISSN (Online) 1935-1704, ISSN (Print) 2194-6124, DOI: https://doi.org/10.1515/bejte-2015-0093. Export Citation

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