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On the evolution of prize perceptions in contests

Boudreau, James W. and Shunda, Nicholas (2010): On the evolution of prize perceptions in contests.

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Abstract

We apply an indirect evolutionary approach to players' perceived prize valuations in contests. Evolution in finite populations leads to preferences that overstate the prize's material value and induce overexpenditure. We establish an equivalence between the behavior evolutionarily stable preferences induce and evolutionarily stable strategies.

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