Information Acquisition in a War of Attrition
American Economic Journal: Microeconomics
vol. 6,
no. 2, May 2014
(pp. 37-78)
Abstract
We consider a war of attrition where the players can learn about a state that determines their payoffs at stochastic deadline. We study how the incentives to acquire information depend on the (un)verifiability of information and its implications for efficiency. Unverifiability creates distortions (strategic delay in concession or duplication in information acquisition), but encourages information acquisition. In our model, provided that the information acquisition cost is small, these two effects cancel each other out and the players' expected payoffs in symmetric equilibrium are identical whether information is verifiable or not. We also show that shortening deadlines may prolong the conflict.Citation
Kim, Kyungmin, and Frances Zhiyun Xu Lee. 2014. "Information Acquisition in a War of Attrition." American Economic Journal: Microeconomics, 6 (2): 37-78. DOI: 10.1257/mic.6.2.37Additional Materials
JEL Classification
- C72 Noncooperative Games
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief
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