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Seoul Journal of Economics - Vol. 25 , No. 2
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Seoul Journal of Economics - Vol. 25, No. 2, pp. 223-232
Abbreviation: SJE
ISSN: 1225-0279 (Print)
Print publication date 30 May 2012
Received 13 Jul 2011 Revised 09 Feb 2012 Accepted 16 Feb 2012

A Reputational Model of Conflict: Why Die to Win?
Jihong Lee
Associate Professor, Department of Economics, Seoul National University, 1 Gwanak-ro, Gwanak-gu, Seoul 151-746, Korea, Tel: +82-2-880-6365, Fax: +82-2-886-4231 (jihonglee@snu.ac.kr)

Funding Information ▼

JEL Classification: C72, D72, D74

Abstract

This paper considers a simple model of zero-sum conflict between two players (e.g., territorial dispute) in which costly actions (e.g., terrorism) are available to one side. We identify how reputation effects shape the outcome of such conflict. A small prior of fanatic commitment type induces the possibility of costly attack followed by withdrawal in equilibrium. The chance of withdrawal is proportional to the self-inflicted cost of attack.

Keywords: Conflict, Terrorism, Reputation
Acknowledgments

The author is grateful to two anonymous referees for their helpful comments. This work was supported by the Je-Won Research Foundation Grant funded via the Institute of Economic Research at Seoul National University.

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