Compound Attrition Games: A Unified Model for Inter- and Intra-Coalition Rivalry

TL;DR

This paper introduces the Compound Coalition-Attrition Game (CCAG), a unified model capturing both inter- and intra-coalition rivalry, revealing feedback effects and characterizing unique mixed-strategy equilibria.

Contribution

It develops a novel integrated game-theoretic framework that combines external and internal attrition processes, addressing limitations of previous separate models.

Findings

External competition increases internal conflict.

Internal discord weakens external performance.

The model characterizes a unique mixed-strategy Nash equilibrium.

Abstract

Strategic competitions in the real world, from wars to geopolitical rivalries, often involve coalitions competing against rival groups. These contests are not simple interactions between unified entities, but multilayered processes in which coalitions face external competition while dealing with internal conflicts over resources and strategy. Existing game-theoretic models typically treat inter-coalition rivalry and intra-coalition competition separately. This paper introduces the Compound Coalition-Attrition Game (CCAG), a unified framework that integrates a war of attrition between coalitions with a simultaneous war of attrition within each coalition. In this model, the endurance of a coalition in external competition is determined by the strategic choices of its members, who compete internally for shares of the outcome. We prove the nonexistence of pure-strategy equilibria and characterize the unique mixed-strategy Nash equilibrium. The analysis reveals feedback effects: external competition intensifies internal conflict, while internal discord weakens external performance. A case study compares traditional commodity markets, including gold, copper, and silver, with cryptocurrency markets, including Bitcoin, Ethereum, and Solana, using data from 2018 to 2023 in a simulation framework. The results demonstrate applicability in industrial strategy, corporate decision-making, and geopolitical competition. The CCAG framework provides a tool for analysing complex strategic environments.