Title: "Wars of Attrition with Evolving Payoffs."
Abstract: I analyze a model of wars of attrition with evolving payoffs. Two players fight over a prize by paying state-dependent flow costs until one player surrenders. The state of the world is commonly observed and evolves over time. The equilibrium is unique and uses threshold strategies: each player surrenders when the state is unfavorable enough to her, while for intermediate states both players strictly prefer to fight on. Taken as a perturbation of the model of wars of attrition with complete information, this model makes related but distinct predictions compared to models using reputation-based refinements (Abreu and Gul, 2000). The model is versatile and can be tractably extended to study partial concessions, commitment devices and deadline effects.