Informal property rights as stable conventions in hawk-dove games with many players

This paper investigates the evolution of conventions (Young Econometrica 61(1):57–84, 1993 ) in n-player hawk-dove games where multiple players share the same payoff-irrelevant label, such as “blue” or “green”. With more than two players, the stochastically stable equilibrium depends on how many players in the contest share each label. If the cost of fighting is high, then the long-run equilibrium is favorable to the label shared by fewer players – those players play hawk – while if the cost is low, then the opposite convention develops. This result provides one explanation for the emergence of informal property rights. In disputes over property, a fundamental distinction exists between the possessor, who is unique, and non-possessors, who can be several. For objects whose value is low relative to the cost of conflict over them, this asymmetry favors the development of informal property rights conventions. Copyright Springer-Verlag Berlin Heidelberg 2015