Rent dissipation in simple Tullock contests

Alex Dickson, Ian A. MacKenzie, Petros G. Sekeris

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)
52 Downloads (Pure)

Abstract

We investigate observed rent dissipation—the ratio of the total costs of rent seeking to the monetary value of the rent—in winner-take-all and share contests, where preferences are more general than usually assumed in the literature. With concave valuation of the rent we find that contests can exhibit observed over-dissipation if the contested rent is below a threshold and yet observed under-dissipation with large rents: the nature of preferences implies contestants are relatively effortful in contesting small rents. Considering more general preferences in contests thus allows us to reconcile the Tullock paradox—where rent-seeking levels are relatively small despite the contested rent being sizeable—with observed over-dissipation of rents in experimental settings, where contested rents are arguably small.
Original languageEnglish
Article number83
Number of pages11
JournalGames
Volume13
Issue number6
DOIs
Publication statusPublished - 13 Dec 2022

Keywords

  • rent seeking
  • rent dissipation
  • Tullock contests

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