When to confront: The role of patience

Alvaro Sandroni, Can Urgun

Research output: Contribution to journalArticlepeer-review

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.

Original languageEnglish (US)
Pages (from-to)219-252
Number of pages34
JournalAmerican Economic Journal: Microeconomics
Volume10
Issue number3
DOIs
StatePublished - Aug 1 2018

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

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