In a two-stage oligopoly, with investment in the first stage and quantity or price competition in the second stage, there is a kind of Folk Theorem: We find (i) over-investment if the goods are substitutes and competition is in strategic substitutes, (ii) under-investment if we have either...

Vendettas occur in many real world settings where rivals compete for a prize, e.g., winning an election or a competitive promotion, by engaging in retaliatory aggressive behavior. We present a benchmark experiment where two players have an initial probability of winning a prize. Retaliatory...