Dunne, J. Paul and Garcia-Alonso, Maria D C and Levine, Paul and Smith, Ron
Managing asymmetric conflict.
Oxford Economic Papers, 58
(Full text available)
This paper considers a simple model of asymmetric conflict, between an incumbent, e.g. government or dominant firm, and potential challengers, e.g. guerrillas or entrants. It is not uncommon for challengers to win such conflicts despite their lack of resources. One way they can do this by exploiting a second mover advantage: choosing to attack the incumbent in ways that it had not prepared for, because it was locked in by past investments. To model such asymmetric conflict we use a three stage game. In the first stage the incumbent chooses effort; in the second stage the challengers choose the degree of differentiation from the incumbent and in the third stage each decide whether to attack or defend and collect their payoffs. Although the game is simple, the calculations required from the players are difficult and shed light on the complexities of many conflicts.
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