Risk-aversion and prudence in rent-seeking games
AbstractThis paper considers a common n-agent symmetric rent-seeking game. It derives conditions so that risk-aversion and risk always decrease rent-seeking efforts. These conditions hold for any regular contest success function when risk-averse rent-seekers are also prudent. Under n = 2, prudence is a necessary and sufficient condition for risk-aversion to decrease rent-seeking efforts compared to risk-neutrality. An intuition for this result is given based on a self-protection model.
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Bibliographic InfoArticle provided by Springer in its journal Public Choice.
Volume (Year): 145 (2010)
Issue (Month): 3 (December)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=100332
Risk-aversion; Rent-seeking; Lobbying; Uncertainty; Prudence; Self-protection; C72; D72; D81;
Other versions of this item:
- 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
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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