American Economic Journal: Microeconomics
no. 3, August 2018
This paper examines the effects of patience on ordinary conflicts such as divorce, price wars and commercial litigation. Players optimally decide when, if ever, to start a destructive confrontation. In the unique equilibrium, there is a tight connection between patience, aggressiveness and strength. In particular patience may lead to immediate confrontation (the most inefficient outcome). This inefficiency is caused by preemptive moves that deny option values to the opponent.
Sandroni, Alvaro, and Can Urgun.
"When to Confront: The Role of Patience."
American Economic Journal: Microeconomics,
Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
Conflict; Conflict Resolution; Alliances; Revolutions