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Risk-aversion and prudence in rent-seeking games

  • Nicolas Treich

    ()

This 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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File URL: http://hdl.handle.net/10.1007/s11127-009-9569-x
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Article provided by Springer in its journal Public Choice.

Volume (Year): 145 (2010)
Issue (Month): 3 (December)
Pages: 339-349

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Handle: RePEc:kap:pubcho:v:145:y:2010:i:3:p:339-349
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