Jump to ContentJump to Main Navigation
Show Summary Details
More options …

The B.E. Journal of Theoretical Economics

Editor-in-Chief: Schipper, Burkhard

Ed. by Fong, Yuk-fai / Peeters, Ronald / Puzzello , Daniela / Rivas, Javier / Wenzelburger, Jan

2 Issues per year


IMPACT FACTOR 2016: 0.229
5-year IMPACT FACTOR: 0.271

CiteScore 2016: 0.30

SCImago Journal Rank (SJR) 2016: 0.398
Source Normalized Impact per Paper (SNIP) 2016: 0.232

Mathematical Citation Quotient (MCQ) 2016: 0.08

Online
ISSN
1935-1704
See all formats and pricing
More options …

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
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
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

References

  • Abreu, D., and F. Gul. 2000. “Bargaining and Reputation.” Econometrica 68 (1):85–117.CrossrefGoogle Scholar

  • Abreu, D., and R. Sethi. 2003. “Evolutionary Stability in a Reputational Model of Bargaining.” Games and Economic Behavior 44 (2):195–216.CrossrefGoogle Scholar

  • Atakan, A. E., and M. Ekmekci. 2014. “Bargaining and Reputation in Search Markets.” The Review of Economic Studies 81 (1):1–29.CrossrefGoogle Scholar

  • Bishop, D. T., C. Cannings, and J. Maynard Smith. 1978. “The War of Attrition with Random Rewards.” Journal of Theoretical Biology 74 (3):377–88.CrossrefGoogle Scholar

  • Bliss, C., and B. Nalebuff. 1984. “Dragon-Slaying and Ballroom Dancing: The Private Supply of a Public Good.” Journal of Public Economics 25 (1):1–12.CrossrefGoogle Scholar

  • Bulow, J., and P. Klemperer. 1999. “The Generalized War of Attrition.” American Economic Review 89 (1):175–89.Crossref

  • Chatterjee, K., and L. Samuelson. 1987. “Bargaining with Two-Sided Incomplete Information: An Infinite Horizon Model with Alternating Offers.” The Review of Economic Studies 54 (2):175–92.CrossrefGoogle Scholar

  • Compte, O., and P. Jehiel. 2002. “On the Role of Outside Options in Bargaining with Obstinate Parties.” Econometrica 70 (4):1477–517.CrossrefGoogle Scholar

  • Fearon, J. D. 1994. “Domestic Political Audiences and the Escalation of International Disputes.” American Political Science Review 88 (3):577–92.CrossrefGoogle Scholar

  • Fudenberg, D., R. Gilbert, J. Stiglitz, and J. Tirole. 1983. “Preemption, Leapfrogging and Competition in Patent Races.” European Economic Review 22 (1):3–31.CrossrefGoogle Scholar

  • Fudenberg, D., and J. Tirole. 1986. “A Theory of Exit in Duopoly.” Econometrica 54 (4):943–60.Crossref

  • Ghemawat, P., and B. Nalebuff. 1985. “Exit.” The RAND Journal of Economics 16 (2):184–94.Crossref

  • Guisinger, A., and A. Smith. 2002. “Honest Threats the Interaction of Reputation and Political Institutions in International Crises.” Journal of Conflict Resolution 46 (2):175–200.CrossrefGoogle Scholar

  • Hendricks, K., A. Weiss, and C. Wilson. 1988. “The War of Attrition in Continuous Time with Complete Information.” International Economic Review 29 (4):663–80.Crossref

  • Kambe, S. 1999. “Bargaining with Imperfect Commitment.” Games and Economic Behavior 28 (2):217–37.CrossrefGoogle Scholar

  • Kreps, D. M., and R. Wilson. 1982. “Reputation and Imperfect Information.” Journal of Economic Theory 27 (2):253–79.CrossrefGoogle Scholar

  • Maynard Smith, J. 1974. “The Theory of Games and the Evolution of Animal Conflicts.” Journal of Theoretical Biology 47 (1):209–21.CrossrefGoogle Scholar

  • Milgrom, P., and J. Roberts. 1982. “Predation, Reputation, and Entry Deterrence.” Journal of Economic Theory 27 (2):280–312.CrossrefGoogle Scholar

  • Milgrom, P. R., and R. J. Weber. 1985. “Distributional Strategies for Games with Incomplete Information.” Mathematics of Operations Research 10 (4):619–32.CrossrefGoogle Scholar

  • Myerson, R. B. 1991. Game Theory: Analysis of Conflict. Cambridge, Massachusetts: Harvard University Press.

  • Nalebuff, B., and J. Riley. 1985. “Asymmetric Equilibria in the War of Attrition.” Journal of Theoretical Biology 113 (3):517–27.CrossrefGoogle Scholar

  • Ordover, J. A., and A. Rubinstein. 1986. “A Sequential Concession Game with Asymmetric Information.” The Quarterly Journal of Economics 101 (4):879–88.Crossref

  • Osborne, M. J. 1985. “The Role of Risk Aversion in a Simple Bargaining Model.” Game Theoretic Models of Bargaining, 181–213.

  • Ozyurt, S. 2014. “Audience Costs and Reputation in Crisis Bargaining.” Games and Economic Behavior 88:250–9.Web of ScienceCrossrefGoogle Scholar

  • Ozyurt, S. 2015. “Searching for a Bargain: Power of Strategic Commitment.” American Economic Journal: Microeconomics 7 (1):320–53.Web of ScienceCrossrefGoogle Scholar

  • Ponsati, C., and J. Sakovics. 1995. “The War of Attrition with Incomplete Information.” Mathematical Social Sciences 29 (3):239–54.CrossrefGoogle Scholar

  • Riley, J. G. 1980. “Strong Evolutionary Equilibrium and the War of Attrition.” Journal of Theoretical Biology 82 (3):383–400.CrossrefGoogle Scholar

  • Sartori, A. E. 2002. “The Might of the Pen: A Reputational Theory of Communication in International Disputes.” International Organization 56 (1):121–49.CrossrefGoogle Scholar

  • Smith, A. 1998. “International Crises and Domestic Politics.” American Political Science Review 92 (3):623–38.Crossref

  • Snyder, J., and E. D. Borghard. 2011. “The Cost of Empty Threats: A Penny, Not a Pound.” American Political Science Review 105:437–56.CrossrefWeb of ScienceGoogle Scholar

  • Trachtenberg, M. 2012. “Audience Costs: An Historical Analysis.” Security Studies 21:3–42.CrossrefWeb of ScienceGoogle Scholar

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

©2016 by De Gruyter. Copyright Clearance Center

Comments (0)

Please log in or register to comment.
Log in