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Is it really overdissipation? A reassessment of evolutionarily stable behavior in contests

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  • Leininger, Wolfgang

Abstract

The term "rent-dissipation" is prominently used in the theory of rent-seeking and its (game) theoretical vehicle contest theory. While in a pure strategy Nash equilibrium of a contest with finitely many players full rent-dissipation cannot occur, this is not the case if the same contests are analyzed with the solution concept of an evolutionarily stable strategy (ESS). Notably, even over-dissipation of a rent in pure strategy ESS is feasible! The paper explains these differences from a principle point of view by linking the ESS-solution theory in contests to the Nash equilibrium solution theory of transfer contests. This insight then not only makes the computation of the ESS-solution of a contest from the Nash solution of a transfer contest an easy exercise, but-more importantly - also leads to a reassessment of the ESS-"over-dissipation" results in the earlier literature: if one replaces the value of the rent with its transfer value, over-dissipation becomes incompatible with ESS, too.

Suggested Citation

  • Leininger, Wolfgang, 2019. "Is it really overdissipation? A reassessment of evolutionarily stable behavior in contests," Ruhr Economic Papers 809, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:809
    DOI: 10.4419/86788938
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    References listed on IDEAS

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    More about this item

    Keywords

    contests; evolutionarily stable strategy; finite population; overdissipation;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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