Loss Aversion and Rent-Seeking: An Experimental Study
AbstractWe report an experiment designed to evaluate the impact of loss aversion on rent-seeking contests. We find, as theoretically predicted, a negative relationship between rent-seeking expenditures and loss aversion. However, for any degree of loss aversion, levels of rent-seeking expenditure are higher than predicted. Moreover, we find that the effect of loss aversion becomes weaker with repetition of the contest.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham in its series Discussion Papers with number 2008-13.
Date of creation: Oct 2008
Date of revision:
Contact details of provider:
Postal: University Park, Nottingham NG7 2RD
Phone: +44 (0) 115 951 5620
Fax: +44 (0) 115 951 4159
Web page: http://www.nottingham.ac.uk/economics/cedex/
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-12-14 (All new papers)
- NEP-CBE-2008-12-14 (Cognitive & Behavioural Economics)
- NEP-EXP-2008-12-14 (Experimental Economics)
- NEP-UPT-2008-12-14 (Utility Models & Prospect Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Potters, Jan & de Vries, Casper G. & van Winden, Frans, 1998.
"An experimental examination of rational rent-seeking,"
European Journal of Political Economy,
Elsevier, vol. 14(4), pages 783-800, November.
- Potters, J.J.M. & Vries, C.G. de & Winden, F.A.A.M. van, 1998. "An experimental examination of rational rentseeking," Open Access publications from Tilburg University urn:nbn:nl:ui:12-79319, Tilburg University.
- Davis, Douglas D & Reilly, Robert J, 1998.
" Do Too Many Cooks Always Spoil the Stew? An Experimental Analysis of Rent-Seeking and the Role of a Strategic Buyer,"
Springer, vol. 95(1-2), pages 89-115, April.
- Douglas Davis & Robert Reilly, 1998. "Do too many cooks always spoil the stew? An experimental analysis of rent-seeking and the role of a strategic buyer," Public Choice, Springer, vol. 95(1), pages 89-115, April.
- Shupp, Robert & Sheremeta, Roman M. & Schmidt, David & Walker, James, 2013.
"Resource allocation contests: Experimental evidence,"
Journal of Economic Psychology,
Elsevier, vol. 39(C), pages 257-267.
- David Schmidt & Robert Shupp & James M. Walker, 2005. "Resource Allocation Contests: Experimental Evidence," Caepr Working Papers 2006-004, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington, revised Aug 2006.
- Robert Shupp & Roman M. Sheremeta & David Schmidt & James Walker, 2013. "Resource Allocation Contests: Experimental Evidence," Working Papers 13-23, Chapman University, Economic Science Institute.
- David Schmidt & Robert S. Shupp & James Walker, 2005. "Resource Allocation Contests: Experimental Evidence," Working Papers 200506, Ball State University, Department of Economics, revised Feb 2005.
- Shupp, Robert & Sheremeta, Roman, 2013. "Resource Allocation Contests: Experimental Evidence," MPRA Paper 49889, University Library of Munich, Germany.
- Millner, Edward L & Pratt, Michael D, 1991. " Risk Aversion and Rent-Seeking: An Extension and Some Experimental Evidence," Public Choice, Springer, vol. 69(1), pages 81-92, February.
- John A. List, 2003.
"Does Market Experience Eliminate Market Anomalies?,"
The Quarterly Journal of Economics,
MIT Press, vol. 118(1), pages 41-71, February.
- John List, 2003. "Does market experience eliminate market anomalies?," Natural Field Experiments 00297, The Field Experiments Website.
- Richard Cornes & Roger Hartley, 2003. "Loss Aversion and the Tullock Paradox," Keele Economics Research Papers KERP 2003/06, Centre for Economic Research, Keele University.
- Amos Tversky & Daniel Kahneman, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Levine's Working Paper Archive
7656, David K. Levine.
- Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
- Hehenkamp, B. & Leininger, W. & Possajennikov, A., 2004.
"Evolutionary equilibrium in Tullock contests: spite and overdissipation,"
European Journal of Political Economy,
Elsevier, vol. 20(4), pages 1045-1057, November.
- Burkhard Hehenkamp & Wolfgang Leininger & Alex Possajennikov, 2003. "Evolutionary Equilibrium in Tullock Contests: Spite and Overdissipation," Discussion Papers in Economics 03_01, University of Dortmund, Department of Economics.
- Edward Millner & Michael Pratt, 1989. "An experimental investigation of efficient rent-seeking," Public Choice, Springer, vol. 62(2), pages 139-151, August.
- Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
- Hanemann, W Michael, 1991. "Willingness to Pay and Willingness to Accept: How Much Can They Differ?," American Economic Review, American Economic Association, vol. 81(3), pages 635-47, June.
- Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 10(1), pages 41-60, May.
- Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1990. "Experimental Tests of the Endowment Effect and the Coase Theorem," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1325-48, December.
- Shogren, Jason F & Baik, Kyung H, 1991. " Reexamining Efficient Rent-Seeking in Laboratory Markets," Public Choice, Springer, vol. 69(1), pages 69-79, February.
- Steven Tucker & Charles Noussair & Roman M. Sheremeta, 2013.
"Overbidding And Heterogeneous Behavior In Contest Experiments,"
Journal of Economic Surveys,
Wiley Blackwell, vol. 27(3), pages 491-514, 07.
- Sheremeta, Roman, 2013. "Overbidding and Heterogeneous Behavior in Contest Experiments," MPRA Paper 44124, University Library of Munich, Germany.
- Roman M. Sheremeta, 2013. "Overbidding and Heterogeneous Behavior in Contest Experiments," Working Papers 13-06, Chapman University, Economic Science Institute.
- David Kelsey & Tigran Melkonyan, 2014. "Contests with Ambiguity," Discussion Papers 1411, Exeter University, Department of Economics.
- Faravelli, Marco & Stanca, Luca, 2012.
"When less is more: Rationing and rent dissipation in stochastic contests,"
Games and Economic Behavior,
Elsevier, vol. 74(1), pages 170-183.
- Marco Faravelli & Luca Stanca, 2010. "When Less is More: Rationing and Rent Dissipation in Stochastic Contests," Discussion Papers Series 412, School of Economics, University of Queensland, Australia.
- Marco Faravelli & Luca Stanca, 2010. "When Less is More: Rationing and Rent Dissipation in Stochastic Contests," Working Papers 197, University of Milano-Bicocca, Department of Economics, revised Sep 2010.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alex Possajennikov).
If references are entirely missing, you can add them using this form.