Compelling in the Shadow of Power

Petros Sekeris ()
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Petros Sekeris: CRED - Center of Research in the Economics of Development - FUNDP - Facultés Universitaires Notre Dame de la Paix

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Abstract: Power, defined as the ability to longer sustain a mutually damaging situation, determines both the outcome of the game and the way this outcome is reached. In our model, inspired from the Theory of moves (Brams, 1994), two agents, each facing two choices at their respective decision nodes, play a sequential game over an infinite time horizon. We show that the player who is most able to incur losses -the power wielder- imposes on his opponent the strategy he wants him to adopt, the latter finding himself forced to choose between complying and being punished. These equilibrium strategies are proved to be subgame perfect and unique. In most game configurations, the power wielder can even decide the identity of the endogenously determined first mover. To make the link with a widely analyzed real world conflict situation, we apply our model to the Cuban Missile Crisis.

Keywords: Subgame Perfect Equilibrium; Non-Cooperative Game; Holding Power; Threats Credibility; Subgame Perfect Equilibrium. (search for similar items in EconPapers)
Date: 2006
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