To Rely or Not to Rely On the “Burning Bridges” Strategy?

A Game-Theoretical Analysis

Peter T. Baltes, Swiss Military Academy

Introduction

In their books “Thinking Strategically” (1991, pp. 152) and “The Art of Strategy”
(2008, pp. 215), economists Dixit and Nalebuff explore the so-called “burning
bridges” strategy in the historical context of military conflicts and its relevance to
business decisions. By deliberately cutting off himself from the means of retreat or
supply by destroying bridges, burning ships or, in the case of business, switching to
investments with a significant proportion of sunk costs, a player can motivate his
faction to put up a determined fight and communicate this signal to the opposing
side.
However, the motives behind the decision to burn bridges as well as the conditions
under which this particular strategy should be employed still remain unclear: Should
an attacker always use this strategy as the ancient commentator to Sun Tzu’s “The
Art of War”, the general Du Mu, in the chapter “Nine Grounds” points out – see also
Quint (2011)? Or should someone never burn bridges – as, for example, Spiro (2010)
in the context of recruiting decisions suggests? Consequently, the literature must still
remain silent, for example, when it comes to offer an explanation for the decision by
the Allies to organize a fake assembly area in Southeastern England during the
preparations for D-Day, but not to invest resources in the “burning bridges” strategy.
Instead, Eisenhower even had a communiqué prepared for the case of the invasion
being repulsed.

Furthermore, is the primary receiver of this signal really the opponent? This claim is
often made in Industrial Economics in the discussion of excess capacities – for an
overview, refer to Martin (2004, pp. 227) – as means to achieve contestable markets
for an incumbent monopolist. In contrast, the historical evidence that the “burning
bridges” strategy primarily serves this purpose is rather mixed:

 Caesar used his red cloak as a signal to the enemy Celts for his willingness to
lead the counterattack during the battle of Alesia. The Red Baron had his planes
painted in this particular color to install fear on the enemy and to let his fighter
serve as a “signal post” / rallying point for the other members of his unit in the
swirling dogfights over the trenches in WWI. In both historical incidents relying on
 this color implied a credible signal because it increased the probability of getting
killed due to the higher exposure to the enemy.
 The same Caesar deliberately abandoned his horse in the decisive encounter with
the Helvetians at Bibracte to signal to his legionaries that he would share their
fate. William the Conqueror attacking Anglo-Saxon England and Hernan Cortez
attacking the Aztec Empire had their ships burnt before the invasion attempt. It is
hardly believable that the enemy became aware of these actions – how then could
the latter serve as signals to demoralize the opponents?
 Finally, when landing in Tripolis, Rommel did arrange a parade where he inflated
the number of his tanks by having them circling around some housing blocks.
Ironically, no British spy was present, so this show of force was actually in vain.

The paper presents the following perspective on this decision problem: The primary
motive behind the attacker’s decision to burn bridges or boats lies in the impact on
the morale of the own troops in accordance with several strategems of Sun Tzu – for
example, with the following:

 “Put them <the troops> in a spot where they have no place to go, and they will die
before fleeing. If they are to die there, what can they not do? Warriors exert their
full strength. When warriors are in great danger, then they have no fear. When
they there is nowhere to go they are firm, when they are deeply involved they stick
to it. If they have no choice, they will fight.” Sun Tzu (2005, p. 147).

Based on these observations, the benefits of this strategy can in general be linked to
the two potential groups of addressees of the action: On the one side, the attacker’s
troops receive the signal that the most likely result of the campaign consists in
„victory or death or capture“. On the other side, the burning bridges strategy –
assuming a sufficient likelihood for the observability of the corresponding action – can
also have an impact on the morale of the enemy forces of the defender: By watching
the burning, the defenders become aware that they will meet the most stubborn
resistance in the coming battle.

However, this strategy can only serve as a credible signal when it comes at a cost to
its initiator, the attacker. This represents the fundamental insight provided by the
paradigm of the economics of information: Without such costs of employment the
strategy would be “cheap talk” that can be imitated too easily – thus, creating no
signal value / commitment.
Not very surprisingly, a credible signal “victory or death or capture” must have the
option barred to retreat as a valid option because the latter is not only rational on an
individual basis but can also be military justified in many situations because: „By
throwing away my shield, I was able to survive and fight another day.“ Another
negative consequence of burning ships / bridges consists in the drop of the attacker’s
supply level – making it harder to postpone the conflict due to the higher attrition
caused by illness, deserters or stragglers.
These costs on the attacker’s force when employing the burning bridges strategy also
highlight the lever by which the defender can counter it: After observing the
deterioration of the attacker supply lines, the defender can spoil the strategy by –
literally or virtually – starving out the entrenched force. Thus, in the mid-term or in the
long-run the strategy may backfire on the attacker.

Summing up the previous analysis, the credibility of the burning bridges strategy
requires the attacker to sacrifice future benefits – in regards to his position in the
ongoing conflict – for an improvement of his current status resulting from a short-term
morale boost to the own troops and / or from a drop in the enemy morale. This trade-
off in turn implies that by choosing to burn bridges or ships, the attacker’s willingness
to decide the conflict as soon as possible increases. Then, why should the defender
be willing to look for an immediate resolution of the conflict, too? Because his own
costs of delay are so significant that his position in the conflict will only be worse –
despite the strategy’s morale impact on perhaps both opposing forces – when the
confrontation is delayed.

This interpretation reveals that this decision problem features some striking
similarities to the question of intertemporal price differentiation (IPD) – analyzed by
Stokey (1979) in the wake of the discussion of the so-called Coase conjecture
formulated by Coase (1972). The pricing strategy of IPD features a monopolistic
supplier using different points in time to sell a product – for example, books or movies
– in order to separate segments of costumers featuring heterogeneous payment
preferences: In the optimum, the supplier sequentially lowers the price over time by
“running along the demand curve” – i.e., one after another, each segment is served
with a tailored price that skims its specific maximum willingness-to-pay.

However – as Coase (1972, p. 144) had already pointed out – by applying this
strategy, the supplier becomes his own competitor when facing clients fully
anticipating his pricing strategy: Because, why should clients with a high willingness-
to-pay not simply delay their transactions until the price reaches its lowest level?
Thus, this strategy can only not be self-defeating, when a segment with a higher
willingness-to-pay also faces significant costs of delay if it postpones the
corresponding transactions. I.e., the specific clients must be so eager to buy the
product – perhaps, due to its novelty – that they accept the initial higher price and
refrain from waiting, despite the fact that then they would enjoy a lower price.

The paper uses a simple game-theoretical model to highlight how the decision to rely
on the “burning bridges” strategy is coined by the specific relationship between the
respective costs of delay of the opposing forces and the “morale bonus / malus”
received when the bridge is burnt. This is done by taking the historical invasion of
Anglo-Saxon England in 1066 by William the Conqueror as a showcase.

The corresponding analysis shows, for example, that the observability of the action
by the enemy is not a prerequisite to rely on this strategy. The commander of an
attacking force may use the strategy even in a situation where the signal will only be
visible to the own troops. However, his information about the enemy’s situation must
be able to “ensure” him that the defender will not be eager to postpone the
confrontation: Like the segments featuring a high willingness-to-pay confronted by a
pricing mechanism targeting for IPD, this eagerness to fight early must stem from the
fact that the defender himself faces high costs of delay. In contrast, Quint (2011)
states that the strategy will always be weakly dominated in the case of a non-
observability of the signal.

The results of the analysis are then discussed in regards to their relevance to
business decisions. The paper concludes with a summary.
The Model

The game-theoretical analysis used to identify the factors driving the decision to
“burn bridges” is based on the following situation:

 The Norman duke, William (the potential conqueror), has crossed the English
Channel and landed in Anglo-Saxon controlled England. He commands an army of
x number of fighters.
 After successfully stopping the invasion attempt by a Viking force in the battle of
Stamford Bridge, Anglo-Saxon King Harold prepares to face the Norman invasion.
However, the bloody battle against the Vikings has depleted his corps of veterans
 (the Housecarls) and has significantly decreased the number of fighters that he
can recruit from the local militia in the North.
 Consequently, for the upcoming confrontation with William, Harold’s army (which
includes y men) mainly consists of a significant share of militia fighters recruited
locally from the South. This so-called “fyrd” is only available to fight for a specific
period of time. Gravett (1992, pp. 28) mentions that service times varied between
15 days to 2 months, and the employment of these contingents is restricted to the
boundaries of a shire. In general, these local militiamen could be called up several
times a year. However, Harold’s situation is most likely further aggravated by the
fact that he had gathered the army and the navy some weeks before in the South,
only to have them disbanded after no Norman invasion occurred, and then he had
to call them back into service. Thus, it can be safely assumed that the Anglo-
Saxon supply faces some serious constraints after the costly campaign in the
North and the futile gathering in the South.
 Based on this context, the model assumes that both armies face costs of delay in
regard to the timing of the battle. This has the following implications. First, the
battle could only be fought either at the time of landing (= t1 at the South coast of
England) or later (= t2 at London). Second, in the case the battle is postponed to t2,
both armies suffer from attrition due to desertion, illness and so on. In the model
the impact of attrition is represented by a discount factor reducing the initial
strength of the army. The corresponding discount factor for the Anglo-Saxon force
is    0,1 , while the discount factor for the Norman army is    0,1 .

 The game starts at t1, when William has to decide whether to burn his ships or
spare them. If he burns the ships, his army would receive a morale bonus for the
battle at the South coast – represented by a “boost factor” 1  1 . However, if the
battle occurs at London, then this advantage to the attacker vanishes, thus
reducing 2  1 .

 To calculate the result of the battle between the two opposing forces, the model
uses the simple formula developed by Tullock (1988 / 2005, pp. 85) to determine
the outcome of rent seeking competitions. Thus, analogously the strength ratio for
the two armies determines the probability of victory or defeat in battle. For
example, the probability of a Norman victory when only the two forces x and y are
 taken into account is calculated as: x
xy . Consequently, the probability of an Anglo-

Saxon Victory is: 1  x x y   xx  yy  x x y  y

xy .

 To simplify the analysis, the payoff to each player in the case of his victory is
standardized to “1” and in the case of a defeat he receives “0”. Consequently, both
players will seek to maximize the probability of their victory.
The corresponding situation can be represented by the following game tree.
Figure 1: Burning Bridges in an Extensive Game Form

chooses t1 to battle
x 1
x 1  y  x 
, 1  x 1 1 y 
Harold
: 2

burns
the ships
chooses t2 to battle
x  1
x 1 y 
, 1  xx1 1y 
William

leaves the ships

intact chooses t1 to battle
x
xy 
, 1  x x y 
Harold

chooses t2 to battle x 
x   y  
, 1  x xy 
By forward induction, it can be shown that William weakly prefers to burn his ships
x1
because x1  y  x
x y and x 
x  y  x 
x  y  . Consequently, whether he should do this is

decided by Harold’s preference in regard to the place and date of the battle after
William had chosen to burn his ships. Harold weakly prefers t1 as the time of the
battle when:

1  xx1 1 y  1  x
x
y 
x1
x1  y  x
x y      1

The following figure 2 represents a graphical illustration of the inequality on the right
side. Here, each line represents all combinations of  and 1 sharing the same level
for the Norman discount factor  needed to have Harold still prefer the coast to
London as the site of the battle.

 The initial point for each line on the x-axis is represented by the condition   
with 1  1 . This condition implies that the Anglo-Saxon costs of delay must at least
be equal to those of the Normans: Delaying the battle will hurt Harold at least the
 same as William – thus, in the corresponding situations Harold weakly prefers to
fight the battle at the coast.
 Each line extends from its respective initial point to the North-West because of the
trade-off between the morale bonus and the Anglo-Saxon costs of delay. In
general, an increase in the morale bonus increases the probability of a Norman
victory when the battle is fought at the coast. This in turn motivates Harold to delay
the battle. Consequently, an increase in the morale bonus must be compensated
by an increase in the Anglo-Saxon costs of delay to have Harold still prefer the
coast as the site of the battle.
 In analogy to the usual indifference curve analysis in the case of two
substitutionary goods, the convex curvature of the lines can be explained by the
diminishing marginal rate of transformation between the morale factor and the
Anglo-Saxon discount factor as the slope of each line is determined by   . In 2

general, moving Southeast along the line representing a constant level of the
Norman discount factor implies: The movement leaves Harold’s weakly preference
for the coast unchanged because the marginal reduction of the moral factor –
increasing Harold’s preference to fight at the coast – is exactly offset by the
corresponding increase of the Anglo-Saxon discount factor – shifting Harold’s
preference towards London.

In this context, the diminishing marginal rate of transformation implies on the one
hand, that in the case of high values of the morale factor a marginal increase of
the Anglo-Saxon discount factor must be compensated by a significant reduction
of the morale factor to have Harold still prefer the coast – the impact of the high
morale bonus on the outcome of the battle of the coast is simply too strong to be
compensated by only a marginal increase of the Anglo-Saxon discount factor. On
the other hand, in the case of low values of the morale factor its impact is so
negligible that an increase of the Anglo-Saxon discount factor can already be
compensated by a marginal reduction of the morale factor.
 Figure 2: Where is the Battle for England fought?
1
  0.9
  0.7
  0.5
  0.3
  0.1


The historical showcase illustrates how the decision to make a credible commitment
towards the own willingness to fight by burning bridges / ships is dependent on the
relationship between what is gained by this action – in particular, the increase in the
own morale – and the condition that must be met to make this action valuable to the
originator because it prohibits the access to a defeating counterstrategy for the
opposing side. The model identifies as this requirement of specific relationships for
the costs of delay to the opposing parties.

Thus, what impact can this result – derived from a military setting – have on business
decisions? The corresponding insights can be highlighted by focusing on the
attractiveness of the excess capacity strategy to defend a market. In general, the
competitors of products have the whole set of the marketing mix available to
generate competitive advantages to make them excel in the view of the clients. The
excess capacity strategy can then be interpreted as an analogy to the burning
bridges strategy. If the excess strategy is applied by an incumbent, this implies that
he expects to “fight” – and successfully repulse the potential rivals primarily along
one dimension of the marketing mix: his cost advantage by flooding the market in the
case of an entry. Not surprisingly, this will only work when the corresponding product
has the potential entrant compelled to behave this way. I. e., his options to use other
dimensions of the marketing mix to distinguish himself from the incumbent are rather
limited.
In short, business strategies signaling the incumbent’s commitment to fight against
potential rivals by erecting credible (thus, costly) barriers to entry only payoff when
the potential dimensions of competition are very limited. Otherwise, the resources to
erect these barriers are most of the time “squandered”: The potential rival will evade
competing along the anticipated product dimension – just as the Germans evaded
the Maginot line in 1940 by violating the neutrality of Belgium and the Netherlands.
Conclusions

The analysis showed that treating the “burning bridges” strategy as a game theory
problem is necessary to reach a more complete understanding of when to employ
this strategy. For example, this strategy may lower the supply level of the entrenched
actor. Consequently, the decision to burn a bridge in order to credibly signal a
commitment to fight requires that the opponent himself is confronted with significant
costs of delay that make him eager not to postpone the confrontation. Otherwise, the
latter can spoil this strategy by attempting to starve out the party trying to signal their
determination to fight. In addition, the morale bonus received from choosing this
measure should not be too high; otherwise, the opponent is deterred from seeking an
early decision as well. Thus, using a historical example, this analysis clarified why the
same commander chose to burn his ships in one confrontation but preferred to
retreat in another situation when his supply line become threatened – specifically,
William the Conqueror according to Gravett (1992, p. 14). Finally, the analysis helped
provide a better understanding regarding when this strategy can be applied to
business situations.

Literature

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15 (1) / 1972, S. 143-149.
Dixit, Awinash K. and Nalebuff, Barry J.: The Art of Strategy – A Game Theorist’s
Guide to Success in Business & Life, New York and London 2008
Dixit, Awinash K. and Nalebuff, Barry J.: Thinking Strategically – The Competitive
Edge in Business, Politics, and Everyday Life, New York and London 1991
Gravett, Christopher: Hastings 1066 – The Fall of Saxon England, London et al. 1992
Martin, Stephen: Advanced Industrial Economics, Second Edition, Malden et al. 2002
Spiro, Michael: The Golden Rule – Never Burn Bridges,
http://michaelspiro.wordpress.com/2010/01/25/the-golden-rule-never-burn-bridges,
2010
Stokey, Nancy (1979): Intertemporal Price Discrimination. In: Quarterly Journal of
Economics, 93 (3), S. 355-371
Sun, Tzu: The Art of War, Boston / London 2005
Tullock, Gordon: The Social Dilemma of Autocracy, Revolution, Coup d’Etat, and War
– Vol. 8, Selected Works of Gordon Tullock, Indianapolis 2005
Quint, Dan (2011): Unused Prelim Question – Summer 2011 (Suggested Solutions),
in: www.ssc.wisc.edu/~dquint/…boats%20and%20bridges%20solution.pdf,
9/21/2011