Rent, risk, and replication: Preference adaptation in winner-take-all markets
AbstractWe study the evolution of an economy where agents who are heterogeneous with respect to risk attitudes can either earn a certain income or enter a risky rent-seeking contest. We assume that agents behave rationally given their preferences, but that the population distribution of preferences evolves over time in response to material payoffs. We show that, in particular, initial distributions with full support converge to stationary states where all types may still be present, risk lovers specialize in rentseeking, and the available rents are perfectly dissipated. -- Der Autor untersucht die Entwicklung einer Volkswirtschaft, in der sich die Akteure in ihrer Einstellung zu Risiken unterscheiden. Sie kÃ¶nnen entweder ein bestimmtes Einkommen erlangen oder sich in einen riskanten Rent-Seeking-Wettbewerb (Wettbewerb zum Erlangen einer Rente) begeben. Angenommen wird rationales Verhalten der Akteure bei gegebenen PrÃ¤ferenzen an, wobei sich die Verteilung der PrÃ¤ferenzen innerhalb der BevÃ¶lkerung als Antwort auf die materiellen Ergebnisse des Wettbewerbs entwickelt. Es wird gezeigt, daÃ im einzelnen, die ursprÃ¼nglichen Verteilungen mit ganzer UnterstÃ¼tzung gegen stationÃ¤re ZustÃ¤nde konvergieren, in welchen noch immer alle Typen prÃ¤sent sein kÃ¶nnen. Dabei spezialisieren sich risikofreudige Individuen auf Rent-seeking und die erzielbaren Renten sind perfekt gestreut.
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Bibliographic InfoArticle provided by Elsevier in its journal Games and Economic Behavior.
Volume (Year): 41 (2002)
Issue (Month): 2 (November)
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Web page: http://www.elsevier.com/locate/inca/622836
Other versions of this item:
- Wärneryd, Karl, 2001. "Rent, risk, and replication: preference adaptation in winner-take-all markets," Discussion Papers, Research Unit: Market Processes and Governance FS IV 01-10, Social Science Research Center Berlin (WZB).
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
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