Information Acquisition in a War of Attrition

47 Pages Posted: 6 Sep 2012

See all articles by Kyungmin Kim

Kyungmin Kim

University of Iowa

Frances Xu

The University of Hong Kong

Date Written: August 3, 2012

Abstract

We consider a war of attrition with stochastic deadlines in which the players can learn about the state that determines their payoffs at deadline. We study how the players' incentives to acquire information depend on the (un)verifiability of information and what implications these incentives have for efficiency in information acquisition. We show that unverifiability creates distortions (strategic delay or information duplication) after a player's information acquisition, but encourages the players' information acquisition (less delay in information acquisition). We demonstrate that in our model, these two effects cancel each other out and, therefore, the players' expected payoffs in symmetric equilibrium are identical whether information is verifiable or not. We also show that shortening deadlines may prolong the conflict.

Keywords: Information Acquisition, War of Attrition, Verifiability of Information

JEL Classification: C78, D82, D83

Suggested Citation

Kim, Kyungmin and Xu, Frances, Information Acquisition in a War of Attrition (August 3, 2012). Available at SSRN: https://ssrn.com/abstract=2142257 or http://dx.doi.org/10.2139/ssrn.2142257

Kyungmin Kim

University of Iowa ( email )

341 Schaeffer Hall
Iowa City, IA 52242-1097
United States

Frances Xu (Contact Author)

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

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