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Rent Dissipation and Efficiency in a Contest with Asymmetric Valuations

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  • Hurley, Terrance M

Abstract

This paper introduces contest efficiency as an alternative to rent dissipation when measuring efficiency in a contest with asymmetric valuations. Contest efficiency is defined as the expected proportion of the maximum obtainable benefit captured by the contest and differs from rent dissipation because it values the expected winner of the contest. Therefore, rent dissipation and contest efficiency may suggest contradictory conclusions when agents have asymmetric valuations. This result is illustrated when comparing alternative equilibria in contests with asymmetric reimbursement and when analyzing the comparative static effect of a change in the relative benefit of two agents in a Cournot-Nash contest. Copyright 1998 by Kluwer Academic Publishers

Suggested Citation

  • Hurley, Terrance M, 1998. "Rent Dissipation and Efficiency in a Contest with Asymmetric Valuations," Public Choice, Springer, vol. 94(3-4), pages 289-298, March.
    • Handle: RePEc:kap:pubcho:v:94:y:1998:i:3-4:p:289-98
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    1. repec:elg:eechap:15325_5 is not listed on IDEAS
    2. Metzger, Lars P., 2015. "Alliance Formation in Contests with Incomplete Information," Ruhr Economic Papers 544, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    3. repec:ebl:ecbull:v:8:y:2005:i:10:p:1-10 is not listed on IDEAS
    4. Giuseppe Dari-Mattiacci & Eric Langlais & Bruno Lovat & Francesco Parisi, 2013. "Asymmetries in Rent-Seeking," Working Papers hal-04141218, HAL.
    5. Gil S. Epstein & Shmuel Nitzan, 2005. "Size and distribution of prizes and efforts in contests," Economics Bulletin, AccessEcon, vol. 8(10), pages 1-10.
    6. Lars P. Metzger, 2015. "Alliance Formation in Contests with Incomplete Information," Ruhr Economic Papers 0544, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    7. Sung-Hoon Park & Chad E. Settle, 2023. "Asymmetric Reimbursement and Contingent Fees in Environmental Conflicts: Observable vs. Unobservable Contracts," Games, MDPI, vol. 14(4), pages 1-10, July.
    8. Alex Dickson & Ian A. MacKenzie & Petros G. Sekeris, 2022. "Rent Dissipation in Simple Tullock Contests," Games, MDPI, vol. 13(6), pages 1-11, December.
    9. Gil S. Epstein & Shmuel Nitzan, 2003. "Political culture and monopoly price determination," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 21(1), pages 1-19, August.
    10. Dijkstra, Bouwe R., 1998. "Cooperation by way of support in a rent seeking contest for a public good," European Journal of Political Economy, Elsevier, vol. 14(4), pages 703-725, November.
    11. Gallice, Andrea, 2017. "An approximate solution to rent-seeking contests with private information," European Journal of Operational Research, Elsevier, vol. 256(2), pages 673-684.
    12. Epstein, Gil S. & Mealem, Yosef, 2013. "Politicians, Governed vs. Non-Governed Interest Groups and Rent Dissipation," IZA Discussion Papers 7736, IZA Network @ LISER.
    13. Gil Epstein & Igal Milchtaich & Shmuel Nitzan & Mordechai Schwarz, 2007. "Ambiguous political power and contest efforts," Public Choice, Springer, vol. 132(1), pages 113-123, July.
    14. Matthew D. Mitchell, 2019. "Uncontestable favoritism," Public Choice, Springer, vol. 181(1), pages 167-190, October.
    15. Giuseppe Dari-Mattiacci & Sander Onderstal & Francesco Parisi, 2009. "Seeking rents in the shadow of Coase," Public Choice, Springer, vol. 139(1), pages 171-196, April.
    16. Gil S. Epstein & Shmuel Nitzan, 2006. "Effort and Performance in Public Policy Contests," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(2), pages 265-282, May.
    17. Sung-Hoon Park & Jason F. Shogren, 2021. "A Virtuous Circle of Governance Contests with Externalities," Sustainability, MDPI, vol. 13(14), pages 1-12, July.
    18. Alex Dickson & Ian MacKenzie & Petros G Sekeris, 2020. "Rent dissipation in share contests," Working Papers 2014, University of Strathclyde Business School, Department of Economics.
    19. Gil Epstein & Yosef Mealem, 2015. "Politicians, governed versus non-governed interest groups and rent dissipation," Theory and Decision, Springer, vol. 79(1), pages 133-149, July.
    20. Hurley, Terrance M. & Shogren, Jason F., 1998. "Asymmetric information contests," European Journal of Political Economy, Elsevier, vol. 14(4), pages 645-665, November.

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