Information Acquisition in a War of Attrition

Kyungmin Kim and Frances Zhiyun Xu Lee

American Economic Journal: Microeconomics, 2014, vol. 6, issue 2, 37-78

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.

JEL-codes: C72 D82 D83 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/mic.6.2.37
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Citations: View citations in EconPapers (4)

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