Proxy wars are a key pattern of political conflict and interstate competition. Rather than resorting to direct conflicts, which are costly and entail a higher level of uncertainty, governments may opt for proxy wars, which may last longer, but are less costly and render them more immune to...

We analyze the optimal choice of risk in a two-stage tournament game between two players that have different concave utility functions. At the first stage, both players simultaneously choose risk. At the second stage, both observe overall risk and simultaneously decide on effort or investment....