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Multi-Period Rent-Seeking Contests with Carryover: Theory and Experimental Evidence

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  • John Cadigan

    (American University)

  • Pamela Schmitt

    ()
    (United States Naval Academy)

  • Kurtis Swope

    ()
    (United States Naval Academy)

  • Robert Shupp

    (Ball State University)

Abstract

The majority of theoretical and experimental research stemming from Tullock’s (1980) model of rent-seeking considers static, single-period contests. This paper contributes to a growing body of research on multi-period rent-seeking contests by developing and experimentally testing a model in which a player’s effort affects the probability of winning a contest in both the current and future periods. Theory predicts that rent-seeking effort will be shifted forward from later to earlier periods, with no change in overall rent-seeking expenditures relative to the static contest. Experimental results indicate a significant shift forward when “carryover” is present and that the amount shifted is directly related to the carryover rate. Finally, although experimental expenditures are greater than the equilibrium predictions, overall rent-seeking effort in the carryover contests is lower than in similar static contests.

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File URL: http://www.usna.edu/EconDept/RePEc/usn/wp/usnawp5.pdf
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Bibliographic Info

Paper provided by United States Naval Academy Department of Economics in its series Departmental Working Papers with number 5.

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Length: 30 pages
Date of creation: Apr 2004
Date of revision:
Handle: RePEc:usn:usnawp:5

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  1. Sunder, S., 1992. "Experimental Asset Markets: A Survey," GSIA Working Papers, Carnegie Mellon University, Tepper School of Business 1992-19, Carnegie Mellon University, Tepper School of Business.
  2. 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.
  3. 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.
  4. Gradstein, Mark & Konrad, Kai A, 1999. "Orchestrating Rent Seeking Contests," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 109(458), pages 536-45, October.
  5. Baik, Kyung Hwan & Lee, Sanghack, 2000. " Two-Stage Rent-Seeking Contests with Carryovers," Public Choice, Springer, vol. 103(3-4), pages 285-96, June.
  6. Smith, Vernon L & Suchanek, Gerry L & Williams, Arlington W, 1988. "Bubbles, Crashes, and Endogenous Expectations in Experimental Spot Asset Markets," Econometrica, Econometric Society, Econometric Society, vol. 56(5), pages 1119-51, September.
  7. 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.
  8. Edward Millner & Michael Pratt, 1989. "An experimental investigation of efficient rent-seeking," Public Choice, Springer, vol. 62(2), pages 139-151, August.
  9. Shogren, Jason F & Baik, Kyung H, 1991. " Reexamining Efficient Rent-Seeking in Laboratory Markets," Public Choice, Springer, vol. 69(1), pages 69-79, February.
  10. Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 10(1), pages 41-60, May.
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