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Depends. If you model this as a reputation game, depending on who is the sane and who is the crazy sender, the PBE might might be a pooling equilibrium(i.e make
by mamonster 2y ago
Depends. If you model this as a reputation game, depending on who is the sane and who is the crazy sender, the PBE might might be a pooling equilibrium(i.e makes sense to build the reputation of being a predatory firm).
- JumpCrisscross 2y ago> makes sense to build the reputation of being a predatory firm To what end? It isn't going to placate the hawks in America. And it's likely to inflame them elsewhere, e.g. in Europe. The only way you can position it as a win is within China's domestic politics, where it would save face for Xi and his acolytes. (Hence, the inefficiency of dictatorship.)
- mamonster 2y agoI wasn't making a concrete case(I have no idea what is either in U.S gov's or Xi's head), was just making the point that when you allow for signals with costs and subsequent belief updates then setting multiples of billions of dollars on fire may be economically rational.
- insane_dreamer 2y ago> The only way you can position it as a win is within China's domestic politics, where it would save face for Xi and his acolytes. do not discount the importance of this; much of CCP's actions revolve around its survival