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Arms Races and Negotiations

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Author Info
Sandeep Baliga
Tomas Sjostrom () (Department of Economics, Kellogg Graduate School of Management, Northwestern University, Department of Economics, Rutgers the State University of New Jersey)

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Abstract

A state which does not desire an arms race may nevertheless acquire new weapons if it believes another state will acquire them. If each state assigns some arbitrarily small probability to the event that the other state has a dominant strategy to acquire more weapons, then a multiplier effect appears, and the unique Bayesian Nash equilibrium involves an arms race with probability one. However, if the prior probability that a player is a dominant strategy type is sufficiently small, then there is an equilibrium of the cheap-talk extension of the arms race game where the probability of an arms race is close to zero.

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Publisher Info
Paper provided by Institute for Advanced Study, School of Social Science in its series Economics Working Papers with number 0007.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 26 pages
Date of creation: Mar 2001
Date of revision:
Publication status: Published in Review of Economic Studies Vol. 1(2) 2004 pp. 351-369
Handle: RePEc:ads:wpaper:0007

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Related research
Keywords: Multiplier Effect; Bayesian Nash Equilibrium; Cheap-talk Extension; Arms Race Game;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Fudenberg, Drew & Tirole, Jean, 1991. "Perfect Bayesian equilibrium and sequential equilibrium," Journal of Economic Theory, Elsevier, vol. 53(2), pages 236-260, April. [Downloadable!] (restricted)
  2. Morris, Stephen & Shin, Hyun Song, 1998. "Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks," American Economic Review, American Economic Association, vol. 88(3), pages 587-97, June. [Downloadable!] (restricted)
    Other versions:
  3. Rubinstein, Ariel, 1989. "The Electronic Mail Game: Strategic Behavior under "Almost Common Knowledge."," American Economic Review, American Economic Association, vol. 79(3), pages 385-91, June. [Downloadable!] (restricted)
  4. Matthews, Steven A. & Postlewaite, Andrew, 1989. "Pre-play communication in two-person sealed-bid double auctions," Journal of Economic Theory, Elsevier, vol. 48(1), pages 238-263, June. [Downloadable!] (restricted)
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  5. Carlsson, Hans & van Damme, Eric, 1993. "Global Games and Equilibrium Selection," Econometrica, Econometric Society, vol. 61(5), pages 989-1018, September. [Downloadable!] (restricted)
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  6. Sandeep Baliga & Stephen Morris, 2000. "Coordination, Spillovers, and Cheap Talk," Discussion Papers 1301, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
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  7. Banks, Jeffrey S. & Calvert, Randall L., 1992. "A battle-of-the-sexes game with incomplete information," Games and Economic Behavior, Elsevier, vol. 4(3), pages 347-372, July. [Downloadable!] (restricted)
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  1. Stephen Morris & Hyun Song Shin, 2000. "Global Games: Theory and Applications," Cowles Foundation Discussion Papers 1275R, Cowles Foundation, Yale University, revised Aug 2001. [Downloadable!]
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  2. Schwarz, Michael & Sonin, Konstantin, 2005. "A Theory of Brinkmanship, Conflicts, and Commitments," CEPR Discussion Papers 5075, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Murali Agastya & Flavio Menezes & Kunal Sengupta, 2005. "Cheap talk, Efficiency and Egalitarian Cost Sharing In Joint Projects," Levine's Working Paper Archive 784828000000000551, David K. Levine. [Downloadable!]
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  4. Sandeep Baliga & Tomas Sjöström, 2006. "Strategic Ambiguity and Arms Proliferation," Levine's Bibliography 122247000000001247, UCLA Department of Economics. [Downloadable!]
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  5. Kaushik Basu, 2005. "Racial conflict and the malignancy of identity," Journal of Economic Inequality, Springer, vol. 3(3), pages 221-241, December. [Downloadable!] (restricted)
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  6. Stephen Morris & Hyun Song Shin, 2003. "Heterogeneity and Uniqueness in Interaction Games," Cowles Foundation Discussion Papers 1402, Cowles Foundation, Yale University. [Downloadable!]
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  7. Kaushik Basu, 2007. "Identity and altruism: The Moral basis of prosperity and oppression," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 08-08, Indian Statistical Institute, New Delhi, India. [Downloadable!]
  8. Sandro Brusco & Giuseppe Lopomo, 2004. "Simultaneous Ascending Bid Auctions with Privately Known Budget Constraints," Levine's Bibliography 122247000000000373, UCLA Department of Economics. [Downloadable!]
  9. Xue, J., 2006. "Collective Behavior with Endogenous Thresholds," Cambridge Working Papers in Economics 0613, Faculty of Economics, University of Cambridge. [Downloadable!]
  10. Matthew O. Jackson & Massimo Morelli, 2007. "Strategic Militarization, Deterrence and Wars," Discussion Papers 0708-04, Columbia University, Department of Economics. [Downloadable!]
  11. Robert J. Aumann & Sergiu Hart, 2002. "Long Cheap Talk," Discussion Paper Series dp284, Center for Rationality and Interactive Decision Theory, Hebrew University, Jerusalem, revised Nov 2002. [Downloadable!]
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    • Robert J. Aumann & Sergiu Hart, 2003. "Long Cheap Talk," Econometrica, Econometric Society, vol. 71(6), pages 1619-1660, November. [Downloadable!] (restricted)
  12. Jung, Hanjoon Michael, 2007. "Strategic Information Transmission through the Media," MPRA Paper 5556, University Library of Munich, Germany, revised Oct 2007. [Downloadable!]
  13. Brendan O'Flaherty & Rajiv Sethi, 2007. "Peaceable kingdoms and war zones: Pre-emption, ballistics and murder in Newark," Discussion Papers 0708-02, Columbia University, Department of Economics. [Downloadable!]
  14. Helmut Bester & Karl Wärneryd, 2006. "Conflict and the Social Contract," Discussion Papers 94, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
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  15. Shyh-fang Ueng, 2005. "A theory of efficient coexistence," International Economic Journal, Korean International Economic Association, vol. 19(3), pages 397-416, September. [Downloadable!] (restricted)
  16. Dan Levin & James Peck, 2005. "Investment Dynamics with Common and Private Values," Levine's Bibliography 666156000000000607, UCLA Department of Economics. [Downloadable!]
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  17. Sylvain Chassang & Gerard Padro i Miquel, 2008. "Conflict and Deterrence under Strategic Risk," NBER Working Papers 13964, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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