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Sequential Decision Analysis of the Traditional Deterrence Game

Author

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  • Carlson Lisa J.

    (Department of Political Science, University of Idaho)

  • Dacey Raymond

    (College of Business and Economics, University of Idaho)

Abstract

We examine the traditional deterrence game between Challenger and Defender. We treat two variations of the game – the complete information game and the one-sided information game where the first mover, Challenger, is the uncertain player. We employ sequential decision theory to analyze the game of incomplete information. The analysis is basic in that we employ a simplifying assumption, specifically that Challenger’s valuation of the status quo is fixed at zero. We examine the behavior of Challenger using both a von-Neumann-Morgenstern decision rule and a Kahneman-Tversky decision rule. The formal results show that given the right combination of outcome valuations and probability values and weightings, Challenger can make choices under the von Neumann-Morgenstern decision rule that are reversed from those made under the Kahneman-Tversky decision rule. We then relate these reversals to the concept of misperception found in the International Relations and Peace Science literatures. Finally, we comment on extensions of the ensuing analysis.

Suggested Citation

  • Carlson Lisa J. & Dacey Raymond, 2004. "Sequential Decision Analysis of the Traditional Deterrence Game," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 10(3), pages 1-16, December.
    • Handle: RePEc:bpj:pepspp:v:10:y:2004:i:3:n:2
    DOI: 10.2202/1554-8597.1069
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    References listed on IDEAS

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    1. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    2. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    3. Michael Simon, 2002. "Rogue state response to BMD: The regional context," Defense & Security Analysis, Taylor & Francis Journals, vol. 18(3), pages 271-292, September.
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    Cited by:

    1. Daniel G. Arce & Todd Sandler, 2009. "Deterrence: Credibility And Proportionality," Economics and Politics, Wiley Blackwell, vol. 21(3), pages 384-408, November.
    2. Christopher K. Butler, 2007. "Prospect Theory and Coercive Bargaining," Journal of Conflict Resolution, Peace Science Society (International), vol. 51(2), pages 227-250, April.

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