Contests over Public Goods: Evolutionary Stability and the Free-Rider Problem
AbstractWe analyze group contests for public goods by applying the solution concept of an evolutionary stable strategy (ESS). We show that a global ESS cannot exist, because a mutant free-rider can always invade group behavior succesfully. There does exist, however, a unique local ESS, which we identify with evolutionary equilibrium. It coincides with Nash equilibrium, the hitherto dominant solution concept in contest theory, if and only if groups are symmetric. For asymmetric groups it always proposes a different and arguably more sensible solution than Nash equilibrium. We explore the properties of (local) ESS in detail.
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Bibliographic InfoPaper provided by University of Dortmund, Department of Economics in its series Discussion Papers in Economics with number 02_02.
Length: 22 pages
Date of creation: Mar 2002
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-06-17 (All new papers)
- NEP-EVO-2006-06-17 (Evolutionary Economics)
- NEP-MIC-2006-06-17 (Microeconomics)
- NEP-PBE-2006-06-17 (Public Economics)
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