IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Ambiguous political power and contest efforts

  • Gil Epstein

    ()

  • Igal Milchtaich
  • Shmuel Nitzan
  • Mordechai Schwarz

When there is incomplete information on the source of power in a contest, the contestants may divide their lobbying efforts between the potential centers of power, only one of which determines the contests’ winning probabilities. Our analysis focuses on the effect of ambiguity regarding the source of power on the contestants’ aggregate effort in a symmetric, simple lottery contest with two potential centers of power. Specifically, we examine the effects of varying the informativeness of the contestants’ private signals (i.e., the probability that a signal is correct) and the degree of correlation between them. Our benchmark case is the standard Tullock’s model, in which the source of power is known, i.e., the contestants’ signals are perfectly informative. We show that the level of aggregate effort in this case is reached also when the signals are perfectly uninformative. However, in any intermediate case the contestants’ aggregate effort is lower, provided that the signals are not perfectly correlated. In other words, there is a U-shape relationship between the informativeness of the signals and the aggregate effort in the contest. The lowest level of effort is spent when the signals are independent and the probability that a signal is true is about 0.85. In this case, efforts are reduced by about one-fifth in comparison with the benchmark case: from a rent dissipation of 50% to slightly over 40%. Copyright Springer Science+Business Media, LLC 2007

If 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.

File URL: http://hdl.handle.net/10.1007/s11127-006-9137-6
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Springer in its journal Public Choice.

Volume (Year): 132 (2007)
Issue (Month): 1 (July)
Pages: 113-123

as
in new window

Handle: RePEc:kap:pubcho:v:132:y:2007:i:1:p:113-123
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100332

References listed on IDEAS
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.:

as in new window
  1. Gil S. Epstein & Shmuel Nitzan, 2002. "Political Culture and Monopoly Price Determination," CESifo Working Paper Series 646, CESifo Group Munich.
  2. Che, Yeon-Koo & Gale, Ian, 1997. " Rent Dissipation When Rent Seekers Are Budget Constrained," Public Choice, Springer, vol. 92(1-2), pages 109-26, July.
  3. Arye L. Hillman & John G. Riley, 1987. "Politically Contestable Rents and Transfers," UCLA Economics Working Papers 452, UCLA Department of Economics.
  4. Davis, Douglas D & Reilly, Robert J, 1999. " Rent-Seeking with Non-identical Sharing Rules: An Equilibrium Rescued," Public Choice, Springer, vol. 100(1-2), pages 31-38, July.
  5. Nitzan, Shmuel, 1991. " Rent-Seeking with Non-identical Sharing Rules," Public Choice, Springer, vol. 71(1-2), pages 43-50, August.
  6. Stein, William E, 2002. " Asymmetric Rent-Seeking with More Than Two Contestants," Public Choice, Springer, vol. 113(3-4), pages 325-36, December.
  7. Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 10(1), pages 41-60, May.
  8. Ellingsen, Tore, 1991. "Strategic Buyers and the Social Cost of Monopoly," American Economic Review, American Economic Association, vol. 81(3), pages 648-57, June.
  9. Che, Yeon-Koo & Gale, Ian L, 1998. "Caps on Political Lobbying," American Economic Review, American Economic Association, vol. 88(3), pages 643-51, June.
  10. Gil S. Epstein & Shmuel Nitzan, 2002. "Effort and Performance in Public-Policy Contests," CESifo Working Paper Series 634, CESifo Group Munich.
  11. Wärneryd, Karl, 2001. "Information in conflicts
    [Information in Konflikten]
    ," Discussion Papers, Research Unit: Market Processes and Governance FS IV 01-11, Social Science Research Center Berlin (WZB).
  12. Chung, Tai-Yeong, 1996. " Rent-Seeking Contest When the Prize Increases with Aggregate Efforts," Public Choice, Springer, vol. 87(1-2), pages 55-66, April.
  13. Nti, Kofi O, 1999. " Rent-Seeking with Asymmetric Valuations," Public Choice, Springer, vol. 98(3-4), pages 415-30, March.
  14. Konrad, Kai A & Schlesinger, Harris, 1997. "Risk Aversion in Rent-Seeking and Rent-Augmenting Games," Economic Journal, Royal Economic Society, vol. 107(445), pages 1671-83, November.
  15. Terrance Hurley, 1998. "Rent dissipation and efficiency in a contest with asymmetric valuations," Public Choice, Springer, vol. 94(3), pages 289-298, March.
  16. Nirvikar Singh & Donald Wittman, 2001. "Contests where there is variation in the marginal productivity of effort," Economic Theory, Springer, vol. 18(3), pages 711-744.
  17. Petra M. Geraats, 2002. "Central Bank Transparency," Economic Journal, Royal Economic Society, vol. 112(483), pages 532-565, November.
  18. Kahana, Nava & Nitzan, Shmuel, 1999. "Uncertain preassigned non-contestable and contestable rents," European Economic Review, Elsevier, vol. 43(9), pages 1705-1721, October.
  19. Gil S . Epstein & Shmuel Nitzan, 2002. "Endogenous Public Policy, Politicization and Welfare," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(4), pages 661-677, October.
  20. Cairns, Robert D. & Van Long, Ngo, 1991. "Rent seeking with uncertain opposition," European Economic Review, Elsevier, vol. 35(6), pages 1223-1235, August.
  21. Nti, Kofi O, 1997. "Comparative Statics of Contests and Rent-Seeking Games," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(1), pages 43-59, February.
  22. Epstein, Gil S. & Nitzan, Shmuel, 2004. "Strategic restraint in contests," European Economic Review, Elsevier, vol. 48(1), pages 201-210, February.
  23. Hurley, Terrance M. & Shogren, Jason F., 1998. "Effort levels in a Cournot Nash contest with asymmetric information," Journal of Public Economics, Elsevier, vol. 69(2), pages 195-210, June.
  24. Kohli, Inderjit & Singh, Nirvikar, 1999. " Rent Seeking and Rent Setting with Asymmetric Effectiveness of Lobbying," Public Choice, Springer, vol. 99(3-4), pages 275-98, June.
  25. Hurley, Terrance M. & Shogren, Jason F., 1998. "Asymmetric information contests," European Journal of Political Economy, Elsevier, vol. 14(4), pages 645-665, November.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:132:y:2007:i:1:p:113-123. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)

or (Christopher F. Baum)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.