Lecture 20 - Subgame perfect equilibrium: wars of attrition

author: Benjamin Polak, Department of Economics, Yale University
recorded by: Yale University
published: Nov. 15, 2010,   recorded: September 2007,   views: 3328
released under terms of: Creative Commons Attribution No Derivatives (CC-BY-ND)
Categories

See Also:

Download Video - generic video source Download yaleecon159f07_polak_lec20_01.mov (Video - generic video source 630.7 MB)

Download Video Download yaleecon159f07_polak_lec20_01.flv (Video 273.0 MB)


Help icon Streaming Video Help

Related Open Educational Resources

Related content

Report a problem or upload files

If you have found a problem with this lecture or would like to send us extra material, articles, exercises, etc., please use our ticket system to describe your request and upload the data.
Enter your e-mail into the 'Cc' field, and we will keep you updated with your request's status.
Lecture popularity: You need to login to cast your vote.
  Bibliography

Description

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.

Reading assignment:

Strategies and Games: Theory And Practice. (Dutta): Chapter 13

Strategy: An Introduction to Game Theory. (Watson): Chapter 16

Resources:

Problem Set 9 [PDF]
Blackboard Notes Lecture 20[PDF]

Link this page

Would you like to put a link to this lecture on your homepage?
Go ahead! Copy the HTML snippet !

Write your own review or comment:

make sure you have javascript enabled or clear this field: