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All-pay war

Author

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  • Roland Hodler
  • Hadi Yektas

Abstract

We study a model of war in which the outcome is uncertain not because of luck on the battlefield (as in standard models), but because the involved countries lack information about their opponent. In our model their production and military technologies are common knowledge, but their resources are private information. Each country decides how to allocate its resources to production and warfare. The country with the stronger military wins and receives aggregate production. In equilibrium the country with a comparative advantage in warfare allocates all resources to warfare for low resource levels and follows a non-decreasing concave strategy thereafter. The opponent allocates a constant fraction of its resources to warfare for low resource levels and follows an increasing non-linear strategy thereafter. From an ex ante perspective the country with a comparative advantage in warfare is likely to win the war unless its military technology is much weaker than the opponent’s.

Suggested Citation

  • Roland Hodler & Hadi Yektas, 2010. "All-pay war," Department of Economics - Working Papers Series 1098, The University of Melbourne.
  • Handle: RePEc:mlb:wpaper:1098
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    References listed on IDEAS

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    Cited by:

    1. Roland Hodler & Hadi Yektas, 2013. "Wars of Conquest and Independence," CESifo Working Paper Series 4282, CESifo Group Munich.

    More about this item

    Keywords

    Conflict; war; all-pay auction; private information;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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