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When to Confront: The Role of Patience†

When to Confront: The Role of Patience† AbstractThis 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 C73, D74) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Microeconomics American Economic Association

When to Confront: The Role of Patience†

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Publisher
American Economic Association
Copyright
Copyright © 2018 © American Economic Association
ISSN
1945-7685
DOI
10.1257/mic.20150309
Publisher site
See Article on Publisher Site

Abstract

AbstractThis 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 C73, D74)

Journal

American Economic Journal: MicroeconomicsAmerican Economic Association

Published: Aug 1, 2018

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