When to Confront: The Role of Patience

Alvaro Sandroni and Can Urgun

American Economic Journal: Microeconomics, 2018, vol. 10, issue 3, 219-52

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.

JEL-codes: C73 D74 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/mic.20150309
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Citations: View citations in EconPapers (1)

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