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Instant Exit from the Asymmetric War of Attrition

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  • David P. Myatt

Abstract

In an asymmetric war of attrition the players` prize valuations are drawn from different distributions. A stochastic strength ordering, based upon relative hazard rates, is used to rank these distributions. The stochastically stronger player is perceived to be strong ex ante, even though her realized valuation may be lower ex post. Since the classic war of attrition exhibits multiple equilibria, the game is perturbed; for instance, by imposing an arbitrarily large time limit, or allowing for the arbitrarily small probability of players that are restricted to fighting forever. In the unique equilibrium of the perturbed game, a stochastically weaker player almost always instantly exits at the beginning, even though her valuation may be higher.

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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 160.

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Date of creation: 01 Apr 2005
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Handle: RePEc:oxf:wpaper:160

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Keywords: war of attrition; exit; rent seeking; auctions; stochastic dominance; games of timing; bargaining; voluntary provision of public goods; macroeconomics stabilization; adoption of technological standards;

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Cited by:
  1. Florian Morath, 2013. "Volunteering and the strategic value of ignorance," Social Choice and Welfare, Springer, vol. 41(1), pages 99-131, June.
  2. Timothy Simcoe, 2012. "Standard Setting Committees: Consensus Governance for Shared Technology Platforms," American Economic Review, American Economic Association, vol. 102(1), pages 305-36, February.
  3. David P. Myatt & Chris Wallace, 2006. "An Evolutionary Analysis of the Volunteer`s Dilemma," Economics Series Working Papers 270, University of Oxford, Department of Economics.
  4. Kwiek, Maksymilian, 2010. "Reputation in multi-unit ascending auction with common values," Discussion Paper Series In Economics And Econometrics 1012, Economics Division, School of Social Sciences, University of Southampton.
  5. Johannes Hörner & Nicolas Sahuguet, 2011. "A war of attrition with endogenous effort levels," Economic Theory, Springer, vol. 47(1), pages 1-27, May.

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