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Conflict Games with Payoff Uncertainty

Author

Listed:
  • Sandeep Baliga

    () (Northwestern)

  • Tomas Sjostrom

    () (Rutgers)

Abstract

Stag hunt and chicken games are canonical representations of two kinds of strategic interactions. In stag hunt, aggression feeds on itself, and mutual fear escalates into conflict. Chicken is a model of preemption and deterrence. With complete information, these games have multiple Nash equilbria. Using standard arguments from the Industrial Organization literature, we find sufficient conditions under which payoff uncertainty generates a unique equilibrium. These conditions encompass information structures ranging from independent types (as in our previous work) to highly correlated types (as in global games).

Suggested Citation

  • Sandeep Baliga & Tomas Sjostrom, 2009. "Conflict Games with Payoff Uncertainty," Departmental Working Papers 200905, Rutgers University, Department of Economics.
  • Handle: RePEc:rut:rutres:200905
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    File URL: http://www.sas.rutgers.edu/virtual/snde/wp/2009-05.pdf
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    Cited by:

    1. Kim, Minseong & Kim, Young-Han, 2013. "When does coordination for free trade regimes fail?," Economic Modelling, Elsevier, vol. 31(C), pages 31-36.

    More about this item

    Keywords

    conflict; global games;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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