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Building reputation in a war of attrition game: Hawkish or Dovish stance?

Özyurt, Selçuk (2016) Building reputation in a war of attrition game: Hawkish or Dovish stance? The B.E. Journal of Theoretical Economics, 16 (2). pp. 797-816. ISSN 2194-6124 (Print) 1935-1704 (Online)

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Official URL: http://dx.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.

Item Type:Article
Uncontrolled Keywords:continuous time games; dispute resolution; reputation; War of attrition game
Subjects:H Social Sciences > HB Economic Theory
ID Code:29548
Deposited By:Selçuk Özyurt
Deposited On:30 Sep 2016 16:09
Last Modified:30 Sep 2016 16:09

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