Competitive myopia: Predatory competition undermines patience

In competitive environments, agents are often compelled by the threat of losing ground in predatory competition to make short-sighted decisions. This is a form of collective irrationality prevalent but not deeply investigated in global governance, market competition, and individual decision-making, which is named competitive myopiaThis paper develops a unified multi-period game-theoretic framework to study this behavior through a reallocation mechanism. The analysis yields three main results. First, the condition for completely avoiding competitive myopia is stringent, while beyond a certain intensity predatory competition drives the system into a myopia trap where universal short-termism becomes the unique equilibrium. Second, competitive myopia necessarily generates long-run aggregate wealth losses, and outside the trap, in the limit these losses are proportional to the intensity of predatory competition. Third, a cutoff equilibrium always exists: disadvantaged agents below a wealth threshold, determined by predatory intensity, choose myopic strategies. These findings imply that the appropriate policy response is regime-dependent. Inside the myopia trap, only moving predatory or return across the boundary is effective, while outside the trap any one of lowering predatory, raising long-term return, or raising the minimum wealth share can suffice.