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When to Confront: The Role of Patience

Author

Listed:
  • Alvaro Sandroni
  • Can Urgun
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.

Suggested Citation

  • Alvaro Sandroni & Can Urgun, 2018. "When to Confront: The Role of Patience," American Economic Journal: Microeconomics, American Economic Association, vol. 10(3), pages 219-252, August.
    • Handle: RePEc:aea:aejmic:v:10:y:2018:i:3:p:219-52
    Note: DOI: 10.1257/mic.20150309
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    Citations

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    Cited by:

    1. Vohra, Akhil, 2023. "Losing money to make money: The benefits of redistribution in collective bargaining in sports," Games and Economic Behavior, Elsevier, vol. 142(C), pages 226-242.

    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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