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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.

Suggested Citation

  • David P. Myatt, 2005. "Instant Exit from the Asymmetric War of Attrition," Economics Series Working Papers 160, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:160
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    File URL: http://www.economics.ox.ac.uk/materials/working_papers/paper160.pdf
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    Cited by:

    1. Hattori, Keisuke, 2016. "Profit-maximizing Wages under Duopoly," MPRA Paper 70288, University Library of Munich, Germany.
    2. Martin C. Byford & Joshua S. Gans, 2014. "Permission to Exist," NBER Working Papers 20512, National Bureau of Economic Research, Inc.
    3. Johannes Hörner & Nicolas Sahuguet, 2011. "A war of attrition with endogenous effort levels," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 47(1), pages 1-27, May.
    4. Kwiek, Maksymilian, 2014. "Conclave," European Economic Review, Elsevier, vol. 70(C), pages 258-275.
    5. Myatt, David P. & Wallace, Chris, 2008. "An evolutionary analysis of the volunteer's dilemma," Games and Economic Behavior, Elsevier, vol. 62(1), pages 67-76, January.
    6. Asako Yasushi, 2015. "One-Sided Games in a War of Attrition," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 15(2), pages 313-331, July.
    7. Florian Morath, 2013. "Volunteering and the strategic value of ignorance," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(1), pages 99-131, June.
    8. Kwiek, Maksymilian, 2013. "Reputation in multi-unit ascending auction with common values," Economics Letters, Elsevier, vol. 118(1), pages 216-218.
    9. Timothy Simcoe, 2012. "Standard Setting Committees: Consensus Governance for Shared Technology Platforms," American Economic Review, American Economic Association, vol. 102(1), pages 305-336, February.

    More about this item

    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;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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