Subgame Perfect Equilibrium: Wars of Attrition
Subgame Perfect Equilibrium: Wars of Attrition: We first play and then analyze wars of attrition; the games that afflict trench warfare, strikes, and businesses in some competitive settings. We find long and damaging fights can occur in class in these games even when the prizes are small in relation to the accumulated costs. These could be caused by irrationality or by players’ having other goals like pride or reputation. But we argue that long, costly fights should be expected in these games even if everyone is rational and has standard goals. We show this first in a two-period version of the game and then in a potentially infinite version. There are equilibria in which the game ends fast without a fight, but there are also equilibria that can involve long fights. The only good news is that, the longer the fight and the higher the cost of fighting, the lower is the probability of such a fight.
Subjects for Online Tutoring & Homework Help
Math Tutoring - Online Math Tutors for all grades and topics
- Calculus
- Geometry
- Algebra
- Trigonometry
- Arithmetic
- Pre Calculus
- Pre Algebra
- Linear Algebra
- Set Theory
- Number Theory
- Logic
- Boolean Algebra
- Probability
- Statistics
- Discrete Math
- Differential Equations
- English
- History
- Economics
- Accounting
- Psychology