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  3. American Economic Journal: Microeconomics
  4. August 2018
  5. When to Confront: The Role of Patience

American Economic Journal:
Microeconomics

ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)

When to Confront: The Role of Patience

  • Alvaro Sandroni
  • Can Urgun
American Economic Journal: Microeconomics
vol. 10, no. 3, August 2018
(pp. 219–52)
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Abstract

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.

Citation

Sandroni, Alvaro, and Can Urgun. 2018. "When to Confront: The Role of Patience." American Economic Journal: Microeconomics 10 (3): 219–52. DOI: 10.1257/mic.20150309

Additional Materials

JEL Classification

  • C73 Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
  • D74 Conflict; Conflict Resolution; Alliances; Revolutions