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 language | English |
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Article number | 83 |
Number of pages | 11 |
Journal | Games |
Volume | 13 |
Issue number | 6 |
DOIs | |
Publication status | Published - 13 Dec 2022 |
Keywords
- rent seeking
- rent dissipation
- Tullock contests