Evolutionarily Stable Strategies in Sports Contests

Abstract: In the recent years, many clubs in the biggest European soccer leagues have run into debts. The sports economic literature provides several explanation for this development, e.g., the league structure (open versus closed league), club constitutions, ruinous rat races between clubs. While the majority of the articles presume the well-known Nash equilibrium concept, I apply evolutionary game theory in a sports contest model. If clubs follow evolutionarily stable strategies (ESS), then ESS generate higher investments and lower profits than predicted by Nash strategies independent of win maximizing or profit maximizing clubs. Overdissipation of the rent is possible for Nash strategies as well as for ESS.