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Games with Espionage


  • Eilon Solan
  • Leeat Yariv


"There is no place where espionage is not possible." -Sun Tzu, The Art of War, approximately 500BC We consider extensive form games in which players decide on their strategies before the start of play and can purchase noisy information about their opponents' decisions concerning future response policies (i.e., spy on their opponents' decisions). This addition to the agent's optimization problem naturally changes the set of subgame perfect equilibria (SPE). For example, in the chain-store model, for sufficiently small costs of espionage, the population of Incumbents splits into a positive fraction that accommodates and a positive fraction that fights. For general 2x2 games in extensive form, the existence of equilibria with espionage turns out to depend on the difference between the Stackelberg equilibrium payoffs and the SPE payoffs. We characterize the set of equilibria with espionage as a sunset of the set of correlated equilibria. Welfare and Pareto properties of such equilibria are also explored.

Suggested Citation

  • Eilon Solan & Leeat Yariv, 1998. "Games with Espionage," Discussion Papers 1257, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  • Handle: RePEc:nwu:cmsems:1257

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    References listed on IDEAS

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    Cited by:

    1. Bilancini, Ennio & Boncinelli, Leonardo, 2018. "Signaling with costly acquisition of signals," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 141-150.
    2. Heller, Yuval & Mohlin, Erik, 2015. "Stable Observable Behavior," MPRA Paper 63013, University Library of Munich, Germany.
    3. D. Thorleuchter & D. Van Den Poel, 2012. "Protecting Research and Technology from Espionage," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/824, Ghent University, Faculty of Economics and Business Administration.
    4. Gauer, Florian & Kuzmics, Christoph, 2016. "Cognitive empathy in conflict situations," Center for Mathematical Economics Working Papers 551, Center for Mathematical Economics, Bielefeld University.
    5. S. Ho, 2008. "Extracting the information: espionage with double crossing," Journal of Economics, Springer, vol. 93(1), pages 31-58, February.
    6. repec:ebl:ecbull:v:3:y:2005:i:18:p:1-4 is not listed on IDEAS
    7. Van Gorder, Robert A. & Caputo, Michael R., 2010. "Envelope theorems for locally differentiable open-loop Stackelberg equilibria of finite horizon differential games," Journal of Economic Dynamics and Control, Elsevier, vol. 34(6), pages 1123-1139, June.
    8. Barrachina, Alex & Tauman, Yair & Urbano, Amparo, 2014. "Entry and espionage with noisy signals," Games and Economic Behavior, Elsevier, vol. 83(C), pages 127-146.

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    Espionage; subgame perfect equilibria; information; timing.;

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