On the evolution of prize perceptions in contests

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 evolutionarily stable strategies and the behavior induced by evolutionarily stable preferences. ► We analyze evolution of prize valuation perceptions in contests. ► Evolutionarily stable preferences (ESPs) overstate the prize value for finite populations. ► ESPs match the prize value for infinite populations. ► The behavior induced by ESPs is equivalent to evolutionarily stable strategies.