Evolutionary equilibrium in contests with stochastic participation: Entry, effort and overdissipation

Yiquan Gu, Burkhard Hehenkamp and Wolfgang Leininger

Journal of Economic Behavior & Organization, 2019, vol. 164, issue C, 469-485

Abstract: This paper examines the evolutionary stability of behaviour in contests where players’ participation can be stochastic. We find, for exogenously given participation probabilities, players exert more effort under the concept of a finite-population evolutionarily stable strategy (FPESS) than under Nash equilibrium (NE). We show that there is ex-ante overdissipation under FPESS for sufficiently large participation probabilities, if, and only if, the impact function is convex. With costly endogenous entry, players enter the contest with a higher probability and exert more effort under FPESS than under NE. Importantly, under endogenous entry, overdissipation can occur for all (Tullock) contest success functions, in particular those with concave impact functions.

Keywords: Contests with stochastic participation; Overdissipation; Evolutionarily stable strategy; Finite population; Endogenous entry (search for similar items in EconPapers)
JEL-codes: B52 C73 D72 D82 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Evolutionary Equilibrium in Contests with Stochastic Participation: Entry, Effort and Overdissipation (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:164:y:2019:i:c:p:469-485

DOI: 10.1016/j.jebo.2019.06.011

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