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Escalation and Cooperation in Conflict Situations

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  • Wolfgang Leininger

    (University of Bonn)

Abstract

We present a new game-theoretic analysis of an abstract auction game that captures essential strategic aspects of escalation phenomena. Two competitive adversaries commit resources irreversibly in order to win an indivisible prize; the winner will take the prize while both winner and loser incur the cost of their bids (investments). Following O'Neill (1986), we first reexamine a discrete version of the game and emphasize some strategic considerations that give rise to new bidding strategies of players. These new strategies, however, confirm O'Neill's result qualitatively: Rational players should not bid against each other. We then introduce a more general model of the game and show that escalatory competitive bids are compatible with equilibrium play. Equilibria with escalating bidding eventually realize a “draw†: Initial firmness (leading to escalation) is followed by conciliatory behavior that eventually implements a common commitment level.

Suggested Citation

  • Wolfgang Leininger, 1989. "Escalation and Cooperation in Conflict Situations," Journal of Conflict Resolution, Peace Science Society (International), vol. 33(2), pages 231-254, June.
    • Handle: RePEc:sae:jocore:v:33:y:1989:i:2:p:231-254
    DOI: 10.1177/0022002789033002003
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    References listed on IDEAS

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    1. Christopher Harris & John Vickers, 1985. "Perfect Equilibrium in a Model of a Race," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(2), pages 193-209.
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    Cited by:

    1. Migheli, Matteo, 2012. "It is not just escalation: The one dollar game revisited," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(4), pages 434-438.

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