Forward Induction in Arms Races
University of Bologna - Department of Economics
February 18, 2011
Quaderni DSE Working Paper No. 742
I investigate a two-country non cooperative game where the status quo ante is asymmetric as one country is endowed with nuclear weapons while the other is not and is evaluating the opportunity of build up a nuclear arsenal. After identifying the conditions on payoffs such that the resulting reduced form is a coordination game with two symmetric equilibria, I resort to forward induction to show that the implicit signaling mechanism in it may lead countries to select the peaceful equilibrium in a symmetric environment where both are endowed with analogous arsenals.
Number of Pages in PDF File: 12
Keywords: arms race, wargames, escalation
JEL Classification: C72, F50working papers series
Date posted: March 23, 2011
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