A THEORY OF PROTRACTED WARS

Luis Corchon
Economics, University Carlos III

*Carmen Bevia

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     Last modified: November 22, 2010
     Presentation date: 03/12/2011 2:45 PM in NH 1120, Session A
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Abstract
We consider two countries fighting a war in each period, i.e. a protracted war. They dispute an indivisible which they valuate differently. These valuations do not change with time. Agents are completely informed.
The war is repeated an infinite number of times. An important feature is that countries are asymmetric.
Assuming that today's strength in war depend linearly on the share of the resource obtained in the previous period we characterize the set of subgame perfect equilibria, We are specially interested in when and how the war stabilizes or by contrary, ends in the victory of one of the parties.