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Building Reputation in a War of Attrition Game: Hawkish or Dovish Stance?

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  • Özyurt Selçuk

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.

Suggested Citation

  • Özyurt Selçuk, 2016. "Building Reputation in a War of Attrition Game: Hawkish or Dovish Stance?," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 16(2), pages 797-816, June.
    • Handle: RePEc:bpj:bejtec:v:16:y:2016:i:2:p:797-816:n:14
    DOI: 10.1515/bejte-2015-0093
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    References listed on IDEAS

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    1. Alp E. Atakan & Mehmet Ekmekci, 2014. "Bargaining and Reputation in Search Markets," Review of Economic Studies, Oxford University Press, vol. 81(1), pages 1-29.
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    3. Janusz A. Ordover & Ariel Rubinstein, 1986. "A Sequential Concession Game with Asymmetric Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(4), pages 879-888.
    4. Smith, Alastair, 1998. "International Crises and Domestic Politics," American Political Science Review, Cambridge University Press, vol. 92(3), pages 623-638, September.
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