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.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 37-78 |
| Number of pages | 42 |
| Journal | American Economic Journal: Microeconomics |
| Volume | 6 |
| Issue number | 2 |
| DOIs | |
| State | Published - Jan 1 2014 |
| Externally published | Yes |
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ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
Cite this
Information acquisition in a war of attrition. / Kim, Kyungmin; Lee, Frances Zhiyun Xu.
In: American Economic Journal: Microeconomics, Vol. 6, No. 2, 01.01.2014, p. 37-78.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Information acquisition in a war of attrition
AU - Kim, Kyungmin
AU - Lee, Frances Zhiyun Xu
PY - 2014/1/1
Y1 - 2014/1/1
N2 - 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.
AB - 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.
UR - http://www.scopus.com/inward/record.url?scp=84900403315&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84900403315&partnerID=8YFLogxK
U2 - 10.1257/mic.6.2.37
DO - 10.1257/mic.6.2.37
M3 - Article
AN - SCOPUS:84900403315
VL - 6
SP - 37
EP - 78
JO - American Economic Journal: Microeconomics
JF - American Economic Journal: Microeconomics
SN - 1945-7669
IS - 2
ER -