All-in Fighting

41 Pages Posted: 5 Oct 2021 Last revised: 24 Aug 2022

See all articles by Stefano Barbieri

Stefano Barbieri

Tulane University - Department of Economics

Marco Serena

Max Planck Institute for Tax Law and Public Finance

Date Written: October 4, 2021

Abstract

Players fighting in a sequence of battles privately know whether they are rational (and choose fighting efforts so as to maximize payoff) or automatons locked into fighting "all-in" in every battle. Rational players may pretend to be automatons and fight all-in in early battles as doing so buys a beneficial "all-in look" that intimidates rivals in future battles. We study such dynamics. In the unique symmetric equilibrium, a rational player has strictly positive payoff only if she monopolizes reputation for fighting all-in. In a reputational oligopoly, a fierce war of attrition to become the reputational monopolist may yield overdissipation. In a reputational monopoly, overdissipation never happens and the monopolist mixes between fighting "mildly" (not all-in) to cash in on her reputation today and fighting all-in to boost her reputation. Applications include turf wars, conflicts, and litigation.

JEL Classification: C72, D82, D83

Suggested Citation

Barbieri, Stefano and Serena, Marco, All-in Fighting (October 4, 2021). Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2021-16, Available at SSRN: https://ssrn.com/abstract=3935770 or http://dx.doi.org/10.2139/ssrn.3935770

Stefano Barbieri

Tulane University - Department of Economics ( email )

New Orleans, LA 70118
United States

Marco Serena (Contact Author)

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

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