We develop a symmetric incomplete-information continuous-time two-player war-of-attrition game with an option to fight decisively. We show that there exists an essentially unique symmetric Bayesian Nash equilibrium. Under equilibrium, the game does not end immediately, and a costly delay persists even with the availability of the fighting option that ends the game if chosen. In addition, there exists a critical time in which a fight occurs unless a player resigns before that time.
- Bayesian Nash equilibrium
- Incomplete information
- War of attrition
ASJC Scopus subject areas
- Management Science and Operations Research
- Industrial and Manufacturing Engineering
- Applied Mathematics