Information acquisition in a war of attrition

Kyungmin Kim, Frances Zhiyun Xu Lee

Research output: Contribution to journalArticle

2 Scopus citations

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 languageEnglish (US)
Pages (from-to)37-78
Number of pages42
JournalAmerican Economic Journal: Microeconomics
Volume6
Issue number2
DOIs
StatePublished - May 2014
Externally publishedYes

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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