IDEAS home Printed from https://ideas.repec.org/a/kap/pubcho/v153y2012i1p149-161.html
   My bibliography  Save this article

The evolution of sharing rules in rent seeking contests: Incentives crowd out cooperation

Author

Listed:
  • Heinrich Ursprung

Abstract

Modern societies are characterized by competing organizations that rely predominantly on incentive schemes to align the behavior of their members with the organizations’ objectives. This study contributes to explaining why in so many cases incentive schemes have gradually crowded out cooperation as an organization device. Our explanation does not draw on free-riding, the obvious Achilles’ heel of cooperation, but relies completely on fundamental group contest mechanisms. By investigating a canonical rent seeking model and adopting an evolutionary perspective, the analysis identifies shortcomings in previous results, sets the record straight, and explains why the process of incentivizing organizations is protracted. Copyright Springer Science+Business Media, LLC 2012

Suggested Citation

  • Heinrich Ursprung, 2012. "The evolution of sharing rules in rent seeking contests: Incentives crowd out cooperation," Public Choice, Springer, vol. 153(1), pages 149-161, October.
    • Handle: RePEc:kap:pubcho:v:153:y:2012:i:1:p:149-161
    DOI: 10.1007/s11127-011-9778-y
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11127-011-9778-y
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11127-011-9778-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Heinrich W. Ursprung, 1990. "Public Goods, Rent Dissipation, And Candidate Competition," Economics and Politics, Wiley Blackwell, vol. 2(2), pages 115-132, July.
    2. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    3. Kahana, Nava & Qijun, Liu, 2010. "Endemic corruption," European Journal of Political Economy, Elsevier, vol. 26(1), pages 82-88, March.
    4. Baik, Kyung Hwan & Lee, Sanghack, 2007. "Collective rent seeking when sharing rules are private information," European Journal of Political Economy, Elsevier, vol. 23(3), pages 768-776, September.
    5. Baik, Kyung Hwan & Shogren, Jason F, 1995. "Competitive-Share Group Formation in Rent-Seeking Contests," Public Choice, Springer, vol. 83(1-2), pages 113-126, April.
    6. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603.
    7. Reuben, Ernesto & Tyran, Jean-Robert, 2010. "Everyone is a winner: Promoting cooperation through all-can-win intergroup competition," European Journal of Political Economy, Elsevier, vol. 26(1), pages 25-35, March.
    8. Cheikbossian, Guillaume, 2008. "Heterogeneous groups and rent-seeking for public goods," European Journal of Political Economy, Elsevier, vol. 24(1), pages 133-150, March.
    9. Riechmann, Thomas & Weimann, Joachim, 2008. "Competition as a coordination device: Experimental evidence from a minimum effort coordination game," European Journal of Political Economy, Elsevier, vol. 24(2), pages 437-454, June.
    10. Angelopoulos, Konstantinos & Philippopoulos, Apostolis & Vassilatos, Vanghelis, 2009. "The social cost of rent seeking in Europe," European Journal of Political Economy, Elsevier, vol. 25(3), pages 280-299, September.
    11. Nitzan, Shmuel, 1991. "Rent-Seeking with Non-identical Sharing Rules," Public Choice, Springer, vol. 71(1-2), pages 43-50, August.
    12. Lee, Sanghack, 1995. "Endogenous Sharing Rules in Collective-Group Rent-Seeking," Public Choice, Springer, vol. 85(1-2), pages 31-44, October.
    13. Arye Hillman, 2009. "Hobbes and the prophet Samuel on leviathan government," Public Choice, Springer, vol. 141(1), pages 1-4, October.
    14. Konrad, Kai A., 2004. "Bidding in hierarchies," European Economic Review, Elsevier, vol. 48(6), pages 1301-1308, December.
    15. Ansink, Erik & Weikard, Hans-Peter, 2009. "Contested water rights," European Journal of Political Economy, Elsevier, vol. 25(2), pages 247-260, June.
    16. Arye Hillman & Dov Samet, 1987. "Dissipation of contestable rents by small numbers of contenders," Public Choice, Springer, vol. 54(1), pages 63-82, January.
    17. Heller, William B. & Sieberg, Katri K., 2010. "Honor among thieves: Cooperation as a strategic response to functional unpleasantness," European Journal of Political Economy, Elsevier, vol. 26(3), pages 351-362, September.
    18. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, March.
    19. Kyung Baik, 2008. "Contests with group-specific public-good prizes," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 30(1), pages 103-117, January.
    20. Gil S. Epstein & Yosef Mealem, 2009. "Group Specific Public Goods, Orchestration of Interest Groups and Free Riding," Working Papers 2009-02, Bar-Ilan University, Department of Economics.
    21. Kaoru Ueda, 2002. "Oligopolization in collective rent-seeking," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 19(3), pages 613-626.
    22. Arce, Daniel G., 2010. "Corporate virtue: Treatment of whistle blowers and the punishment of violators," European Journal of Political Economy, Elsevier, vol. 26(3), pages 363-371, September.
    23. Nitzan, Shmuel & Ueda, Kaoru, 2011. "Prize sharing in collective contests," European Economic Review, Elsevier, vol. 55(5), pages 678-687, June.
    24. Gil Epstein & Yosef Mealem, 2009. "Group specific public goods, orchestration of interest groups with free riding," Public Choice, Springer, vol. 139(3), pages 357-369, June.
    25. Hausken, Kjell, 2000. "Cooperation and between-group competition," Journal of Economic Behavior & Organization, Elsevier, vol. 42(3), pages 417-425, July.
    26. Aidt, Toke S. & Hillman, Arye L., 2008. "Enduring rents," European Journal of Political Economy, Elsevier, vol. 24(3), pages 545-553, September.
    27. Chen, Kang & Tang, Fang-Fang, 2009. "Cultural differences between Tibetans and ethnic Han Chinese in ultimatum bargaining experiments," European Journal of Political Economy, Elsevier, vol. 25(1), pages 78-84, March.
    28. 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.
    29. Ryvkin, Dmitry, 2010. "Contests with private costs: Beyond two players," European Journal of Political Economy, Elsevier, vol. 26(4), pages 558-567, December.
    30. Katz, Eliakim & Tokatlidu, Julia, 1996. "Group competition for rents," European Journal of Political Economy, Elsevier, vol. 12(4), pages 599-607, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Akio Kawasaki & Takao Ohkawa & Makoto Okamura, 2019. "Inter-group competition through joint marketing efforts and intra-group Cournot competition," Journal of Economics, Springer, vol. 128(3), pages 203-224, December.
    2. Hefeker Carsten & Potrafke Niklas, 2021. "Heinrich W. Ursprung – Herausragender Ökonom, Mentor und Ratgeber," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 22(4), pages 370-374, November.
    3. Kahana, Nava & Klunover, Doron, 2014. "Rent seeking and the excess burden of taxation," European Journal of Political Economy, Elsevier, vol. 35(C), pages 158-167.
    4. Arye L. Hillman, 2021. "Heinrich Ursprung: a scholarly life," Public Choice, Springer, vol. 189(3), pages 305-312, December.
    5. repec:elg:eechap:15325_6 is not listed on IDEAS
    6. Kahana, Nava & Klunover, Doron, 2014. "Rent Seeking and the Excess Burden of Taxation," IZA Discussion Papers 8160, Institute of Labor Economics (IZA).
    7. Arye L. Hillman & Heinrich W. Ursprung, 2016. "Where are the rent seekers?," Constitutional Political Economy, Springer, vol. 27(2), pages 124-141, June.
    8. Patrick A. McLaughlin & Adam C. Smith & Russell S. Sobel, 2019. "Bootleggers, Baptists, and the risks of rent seeking," Constitutional Political Economy, Springer, vol. 30(2), pages 211-234, June.
    9. Dhritiman Gupta, 2020. "Prize Sharing Rules in Collective Contests: Towards Strategic Foundations," Discussion Papers 20-01, Indian Statistical Institute, Delhi.
    10. Vázquez-Sedano Alexis, 2018. "Sharing the Effort Costs in Group Contests," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 18(1), pages 1-21, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:elg:eechap:15325_6 is not listed on IDEAS
    2. Arye Hillman & Ngo Van Long, 2017. "The social cost of contestable benefits," CIRANO Working Papers 2017s-11, CIRANO.
    3. Shmuel Nitzan & Kaoru Ueda, 2014. "Intra-group heterogeneity in collective contests," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(1), pages 219-238, June.
    4. Konrad, Kai A., 2007. "Strategy in contests: an introduction [Strategie in Turnieren – eine Einführung]," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, WZB Berlin Social Science Center.
    5. Pau Balart & Sabine Flamand & Orestis Troumpounis, 2016. "Strategic choice of sharing rules in collective contests," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 46(2), pages 239-262, February.
    6. Arye L. Hillman & Ngo Van Long, 2017. "Rent Seeking: The Social Cost of Contestable Benefits," CESifo Working Paper Series 6462, CESifo.
    7. Dhritiman Gupta, 2023. "Prize sharing rules in collective contests: when do social norms matter?," Review of Economic Design, Springer;Society for Economic Design, vol. 27(1), pages 221-244, February.
    8. Van Long, Ngo, 2013. "The theory of contests: A unified model and review of the literature," European Journal of Political Economy, Elsevier, vol. 32(C), pages 161-181.
    9. Nitzan, Shmuel & Ueda, Kaoru, 2011. "Prize sharing in collective contests," European Economic Review, Elsevier, vol. 55(5), pages 678-687, June.
    10. Dhritiman Gupta, 2020. "Prize sharing rules in collective contests: When does group size matter?," Discussion Papers 20-04, Indian Statistical Institute, Delhi.
    11. Send, Jonas, 2020. "Conflict between non-exclusive groups," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 858-874.
    12. Ke, Changxia & Konrad, Kai A. & Morath, Florian, 2013. "Brothers in arms – An experiment on the alliance puzzle," Games and Economic Behavior, Elsevier, vol. 77(1), pages 61-76.
    13. Pau Balart & Sabine Flamand & Oliver Gürtler & Orestis Troumpounis, 2018. "Sequential choice of sharing rules in collective contests," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 20(5), pages 703-724, October.
    14. Changxia Ke, 2011. "Fight Alone or Together? The Need to Belong," Working Papers fight_alone_or_together, Max Planck Institute for Tax Law and Public Finance.
    15. Mercier, Jean-François, 2018. "Non-deterministic group contest with private information," Mathematical Social Sciences, Elsevier, vol. 95(C), pages 47-53.
    16. Pau Balart & Sabine Flamand & Orestis Troumpounis, 2014. "Strategic choice of sharing rules in collective contests," Working Papers 64402108, Lancaster University Management School, Economics Department.
    17. Gil S Epstein & Yosef Mealem, 2012. "Cooperation and Effort in Group Contests," Economics Bulletin, AccessEcon, vol. 32(1), pages 624-638.
    18. Konrad, Kai A., 2011. "Strategic aspects of fighting in alliances," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" SP II 2011-105, WZB Berlin Social Science Center.
    19. repec:elg:eechap:15325_3 is not listed on IDEAS
    20. Ian A. MacKenzie, 2009. "Controlling externalities in the presence of rent seeking," CER-ETH Economics working paper series 09/111, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    21. NITZAN, Shmuel & UEDA, Kaoru, 2016. "Selective Incentives and Intra-Group Heterogeneity in Collective Contents," Discussion paper series HIAS-E-24, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    22. Kräkel, Matthias, 2012. "Competitive careers as a way to mediocracy," European Journal of Political Economy, Elsevier, vol. 28(1), pages 76-87.

    More about this item

    Keywords

    Group contests; Rent-seeking; Sharing rules; Cooperation; Incentives; Evolution; D72; D74; M52;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:153:y:2012:i:1:p:149-161. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.