Can learning cause shorter delays in reaching agreements?

Xi Weng

Journal of Mathematical Economics, 2015, vol. 60, issue C, 49-62

Abstract: This paper uses a continuous-time war of attrition model to investigate how learning about private payoffs affects delays in reaching agreement. At each point in time, players may receive a private Poisson signal that completely reveals the concession payoff to be high (good-news learning) or low (bad-news learning). In the good-news model, the expected delay is always non-monotonic in the learning rate: an increase in the learning rate prolongs delay in agreement if the learning rate is sufficiently low. In the bad-news model, numerical examples suggest learning prolongs delay as well.

Keywords: Learning; War of attrition; Delay; Incomplete information (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:60:y:2015:i:c:p:49-62

DOI: 10.1016/j.jmateco.2015.06.010

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