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Games with espionage

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  • Solan, Eilon
  • Yariv, Leeat

Abstract

"There is no place where espionage is not possible." -Sun Tzu, The Art of War, approximately 500BC We consider extensive form games in which players decide on their strategies before the start of play and can purchase noisy information about their opponents' decisions concerning future response policies (i.e., spy on their opponents' decisions). This addition to the agent's optimization problem naturally changes the set of subgame perfect equilibria (SPE). For example, in the chain-store model, for sufficiently small costs of espionage, the population of Incumbents splits into a positive fraction that accommodates and a positive fraction that fights. For general 2x2 games in extensive form, the existence of equilibria with espionage turns out to depend on the difference between the Stackelberg equilibrium payoffs and the SPE payoffs. We characterize the set of equilibria with espionage as a sunset of the set of correlated equilibria. Welfare and Pareto properties of such equilibria are also explored.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 47 (2004)
Issue (Month): 1 (April)
Pages: 172-199

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Handle: RePEc:eee:gamebe:v:47:y:2004:i:1:p:172-199

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Web page: http://www.elsevier.com/locate/inca/622836

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References

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Citations

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Cited by:
  1. repec:ebl:ecbull:v:3:y:2005:i:18:p:1-4 is not listed on IDEAS
  2. Alex Barrachina & Yair Tauman & Amparo Urbano Salvador, 2013. "Entry and espionage with noisy signals," Discussion Papers in Economic Behaviour 0113, University of Valencia, ERI-CES.
  3. S. Ho, 2008. "Extracting the information: espionage with double crossing," Journal of Economics, Springer, vol. 93(1), pages 31-58, February.
  4. Van Gorder, Robert A. & Caputo, Michael R., 2010. "Envelope theorems for locally differentiable open-loop Stackelberg equilibria of finite horizon differential games," Journal of Economic Dynamics and Control, Elsevier, vol. 34(6), pages 1123-1139, June.
  5. D. Thorleuchter & D. Van Den Poel, 2012. "Protecting Research and Technology from Espionage," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/824, Ghent University, Faculty of Economics and Business Administration.

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