Varying the intensity of competition in a multiple prize rent seeking experiment
AbstractWe experimentally test a rent seeking model under five levels of competition. At one extreme, a subjectâs probability of winning a prize is equal to her share of the total expenditures. At lower levels of competition, a subjectâs probability of winning is affected more by her own expenditures than by the expenditures of others. Predicted expenditure levels are positively associated with higher levels of competition. Consistent with previous rent seeking experiments, we find that subjects spend significantly more than the Nash equilibrium prediction at all levels of competition. However, expenditure patterns generally follow the Nash prediction; expenditures decrease as the level of competition decreases. Our experimental design also includes a lottery choice experiment to control for subjectsâ risk preference. We find that subjects who are more risk averse spend significantly less in the contest and this effect is particularly strong for female subjects
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Bibliographic InfoArticle provided by Springer in its journal Public Choice.
Volume (Year): 143 (2010)
Issue (Month): 1 (April)
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Web page: http://www.springerlink.com/link.asp?id=100332
Rent seeking; Experiment; Rent dissipation; Political competition; C91; D72;
Other versions of this item:
- Lisa R. Anderson & Beth A. Freeborn, 2008. "Varying the Intensity of Competition in a Multiple Prize Rent Seeking Experiment," Working Papers 75, Department of Economics, College of William and Mary.
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
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