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Rational Escalation

Gabrielle Demange
Annales d'Économie et de Statistique
No. 25/26, Organisations et jeux / Organizations and Games (Jan. - Jun., 1992), pp. 227-249
Published by: GENES on behalf of ADRES
DOI: 10.2307/20075865
Stable URL: http://www.jstor.org/stable/20075865
Page Count: 23
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Rational Escalation
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Abstract

In many conflicts, protagonists commit resources that will not be returned. These situations, which often lead to apparently wasteful escalation, are well captured by the following "all-pay" auction. Two bidders bid repeatedly for a prize until one drops out. As usual the prize goes to the highest bidder but both bidders, the winner and the looser, pay their bids. Not only a process of escalation may be rational but it may be the only reasonable rational issue. We indeed prove that, if there is some uncertainty about the strength of the players, the only stable equilibrium may entail escalation. This result corroborates the idea that escalation is primarily a struggle to determine which player is the strongest one. /// Dans de nombreux conflits -- course aux armements, investissement en recherche et développement -- les protagonistes se trouvent engagés dans un engrenage de dépenses de plus en plus grandes. De tels comportements, apparemment irrationnels, sont observés dans l'enchére suivante. Deux joueurs enchérissent successivement jusqu' à l'abandon de l'un d'entre eux. Le prix est attribué au plus fort enchérisseur mais aussi bien le perdant que le gagnant doivent payer leur enchére Nous montrons qu'un comportement de surenchére pouvant conduire chaque joueur á dépenser plus que la valeur du prix est la seule issue "raisonnable" (dans le sens de Kohlberg-Mertens). Pour cela, il suffit que les joueurs soient incertains quant à la force de leur adversaire.

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