scholarly journals Information Acquisition in a War of Attrition

2012 ◽  
Author(s):  
Kyungmin Kim ◽  
Frances Xu
Keyword(s):  
Information Acquisition ◽  
War Of Attrition

scholarly journals Information Acquisition in a War of Attrition

2014 ◽  
Vol 6 (2) ◽  
pp. 37-78 ◽  
Author(s):  
Kyungmin Kim ◽  
Frances Zhiyun Xu Lee
Keyword(s):  
Acquisition Cost ◽  
Information Acquisition ◽  
Symmetric Equilibrium ◽  
War Of Attrition ◽  
Expected Payoffs

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. (JEL C72, D82, D83)

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