Otherwise, i’s expected payoff from a concession in ti is
Γ (v - t) dΦj (t) + (1
7o
- ^j (ti)) (v - ti - Ci)
= f (V - t) dΦj
Jo
(t) - Γ (v
Jti
+ (1 - φj∙ (T)) (v - ti - <⅛) + (Φj (T) - φj∙ (ti)) (v - ti - ci)
= Λ (v - t) dΦj (t) + (1
Jo
- φj (T)) (v - ti - ci}
I (ti + Ci
Jti
- t) dΦj (t).
(9)
Φj (ti) < 1 implies that Φj∙ (T) - Φj∙ (ti) > 0 or∕and 1 - Φj∙ (T) > 0. Therefore, for
all ti ∈ (-ci∕2 + T, T), (9) is strictly smaller than
Γ (v - t) dΦj (t) + (1
Jo
- φ (T)) (v - ci/2 - T)
which is i’s expected payoff for ti = T.
A.2 Proof of Lemma 2
(i) As argued in the main text, the best response to tj = T is ti = T, and qi (T) =
Qj (T) = 1 is an equilibrium. Moreover, since -ci∕2 + T < 0, Lemma 1 rules out
any further equilibrium because any individual who contributes with strictly positive
probability in t' ∈ [0,T) would strictly prefer a concession in T to a concession in t'.
(ii) The structure of the equilibrium strategies follows from Hendricks et al. (1988)
and the analysis in the main text. We only show that the strategies constitute an
equilibrium. Suppose that j randomizes according to Fj (t) = Φ (t; c, - ^ + T, 0j,
where Φ is defined in (2). Then, by Lemma 1, i strictly prefers ti = T to any
ti ∈ (-c/2 + T, T). For ti ∈ [0, -c/2 + T], i’s payoff is
ʃ (v - x) - exp (-—) dx + exp ^-τθ
(v — ti — c) — v — c,
27
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