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Cournot’s model of oligopoly - page 22 / 38

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The War of Attrition

  • Two parties involved in a costly dispute

  • E.g. two animals fighting over prey

  • Each animal chooses time at which it intends to give up

  • Once an animal has given up, the other obtains all the prey

  • If both animals give up at the same time then they split the prey equally.

  • Fighting is costly: each animal prefers as short a fight as possible.

Also a model of bargaining between humans.

Let time be a continuous variable that starts at 0 and runs indefinitely.

Assume value to party i of object in dispute is vi > 0; value of

half of object is vi/2.

Each unit of time that passes before one of parties concedes costs each party one unit of payoff.

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