Evolutionary Equilibrium in Contests with Stochastic Participation: Entry, Effort and Overdissipation

Yiquan Gu, Burkhard Hehenkamp and Wolfgang Leininger

No 201810, Working Papers from University of Liverpool, Department of Economics

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 exante 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: C73 D72 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2018-10
New Economics Papers: this item is included in nep-evo, nep-gth and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Forthcoming

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https://www.liverpool.ac.uk/media/livacuk/schoolof ... rium-in-contests.pdf First version, 2018 (application/pdf)

Related works:
Journal Article: Evolutionary equilibrium in contests with stochastic participation: Entry, effort and overdissipation (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:liv:livedp:201810

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