On Rent Dissipation in Dynamic Multi-battle Contests
Abstract
We study dynamic multi-battle contests and examine how the contest structure shapes dynamic incentives and determines the extent of rent dissipation. A discouragement effect often arises -- such as in tug-of-war and best-of- contests -- preventing full rent dissipation even when the series can extend infinitely. We identify a structural property, exchangeability, that contributes to the effect. Leveraging this insight, we establish a necessary and sufficient condition for almost-full rent dissipation. As an application, we introduce the iterated incumbency contest, which illustrates how volatility in the surrounding environment sustains dynamic incentives and generates almost-full rent dissipation, and thus offers insights into various competitive phenomena.
Cite
@article{arxiv.2604.20192,
title = {On Rent Dissipation in Dynamic Multi-battle Contests},
author = {Shanglyu Deng and Qiang Fu and Junchi Li and Zenan Wu},
journal= {arXiv preprint arXiv:2604.20192},
year = {2026}
}