There is an important asymmetry in the problem as formulated here. We have allowed for the possibility that one may shoot when he shouldn’t and the other knows it—the “nervousness” case—but not for the possibility that one may not shoot when he ought to, and the other knows it. (There may be some chance that the burglar has wet ammunition or forgot to load his gun, and I may know that there is such a chance, he may know that I know it, and so forth.) This possibility would apparently be stabilizing, tending to reduce the likelihood of a decision to attack as well as the exogenous likelihood of inadvertent or irrational attack.

SEED: This asymmetry between nervousness (shooting when one shouldn't) and dud ammunition (no shot when one should) is a rich game-theoretic angle for explaining when deterrence works vs. fails.

Thomas C. Schelling, The Strategy of Conflict, loc. 822