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Bilateral Conflict: An Experimental Study of Strategic Effectiveness and Equilibrium

Holt, Charles A. and Palfrey, Thomas R. (2022) Bilateral Conflict: An Experimental Study of Strategic Effectiveness and Equilibrium. Social Science Working Paper, 1459. California Institute of Technology , Pasadena, CA. (Submitted) https://resolver.caltech.edu/CaltechAUTHORS:20220125-191230556

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Abstract

Bilateral conflict involves an attacker with several alternative attack methods and a defender who can take various actions to better respond to different types of attack. These situations have wide applicability to political, legal, and economic disputes, but are particularly challenging to study empirically because the payoffs are unknown. Moreover, each party has an incentive to behave unpredictably, so theoretical predictions are stochastic. This paper reports results of an experiment where the details of the environment are tightly controlled. The results sharply contradict the Nash equilibrium predictions about how the two parties’ choice frequencies change in response to the relative effectiveness of alternative attack strategies. In contrast, nonparametric quantal response equilibrium predictions match the observed treatment effects. Estimation of the experimentally controlled payoff parameters across treatments accurately recovers the true values of those parameters with the logit quantal response equilibrium model but not with the Nash equilibrium model.


Item Type:Report or Paper (Working Paper)
ORCID:
AuthorORCID
Palfrey, Thomas R.0000-0003-0769-8109
Additional Information:We would like to acknowledge the thoughtful suggestions provided by Clement Bohr, helpful discussions with Michael Gibilisco, and the research assistance provided by Nicholas Anderson, Georgia Beazley, Courtney Carpenter, Jessica Ewing, Maggie Isaacson, Yilin Huang, Sophia Lochner, Madison Smither, Erica Sprott, Allison Sullivan, Elin Woolf, and Max Zilvitis. Institutional Review Board approval for this research was obtained from the University of Virginia.
Group:Social Science Working Papers
Subject Keywords:international conflict, terrorism deterrence, attacker-defender games, Nash equilibrium, quantal response equilibrium
Series Name:Social Science Working Paper
Issue or Number:1459
Classification Code:JEL Code: C92
Record Number:CaltechAUTHORS:20220125-191230556
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20220125-191230556
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:113101
Collection:CaltechAUTHORS
Deposited By: Mary Martin
Deposited On:25 Jan 2022 19:40
Last Modified:25 Jan 2022 19:40

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