Analysis of a Poisson-picking symmetric winners-take-all game with randomized payoffs

Abstract

Winners-take-all situations introduce an incentive for agents to diversify their behavior, since doing so will result in splitting an eventual price with fewer people. At the same time, when the payoff of a process depends on a parameter choice that is symmetric with respect to agents, all agents have the incentive to choose the values of the parameter that lead to higher payoffs. We explore the trade-off between these two considerations, with a focus on a particular example. This example can be seen as a simple model for the situation where a group of friends bet against each other about the top-scoring team in a sports league. We obtain analytic characterizations of the symmetric equilibria in the case of only 2 agents and in the case where there are only two possible top-scorers. We also conduct some simulations beyond these cases, and observe how does the pressure to diversify behavior evolve as the parameters of the model change.