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The Strategy of Manipulating Conflict

  • Sandeep Baliga

    ()

    (Northwestern)

  • Tomas Sjostrom

    ()

    (Rutgers)

Two decision-makers choose hawkish or dovish actions in a conflict game with incomplete information. The decision-making can be manipulated by "extremists" who send publicly observed cheap-talk messages. The power of extremists depends on the nature of the underlying conflict game. If actions are strategic complements, a "hawkish extremist" can increase the likelihood of conflict by sending messages which trigger a "fear-spiral" of hawkish actions. This reduces the welfare of both decision-makers. If actions are strategic substitutes, a "dovish extremist" (pacifist) can send messages which cause one decision-maker to back down and become more dovish. This reduces his welfare but benefits the other decision-maker. The hawkish extremist is unable to manipulate the decision-makers if actions are strategic substitutes, and the pacifist is equally powerless if actions are strategic complements.

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File URL: http://www.sas.rutgers.edu/virtual/snde/wp/2009-06.pdf
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Paper provided by Rutgers University, Department of Economics in its series Departmental Working Papers with number 200906.

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Length: 20 pages
Date of creation: 28 Aug 2009
Date of revision:
Handle: RePEc:rut:rutres:200906
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