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Multi-period rent-seeking contests with carryover: Theory and experimental evidence

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  • Pamela Schmitt
  • Robert Shupp
  • Kurtis Swope
  • John Cadigan

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Abstract

This paper develops and experimentally tests 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. Copyright Springer-Verlag Berlin/Heidelberg 2004

Suggested Citation

  • Pamela Schmitt & Robert Shupp & Kurtis Swope & John Cadigan, 2004. "Multi-period rent-seeking contests with carryover: Theory and experimental evidence," Economics of Governance, Springer, vol. 5(3), pages 187-211, November.
  • Handle: RePEc:spr:ecogov:v:5:y:2004:i:3:p:187-211
    DOI: 10.1007/s10101-004-0075-9
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    References listed on IDEAS

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    1. Gradstein, Mark & Konrad, Kai A, 1999. "Orchestrating Rent Seeking Contests," Economic Journal, Royal Economic Society, vol. 109(458), pages 536-545, October.
    2. 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.
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    5. Edward Millner & Michael Pratt, 1989. "An experimental investigation of efficient rent-seeking," Public Choice, Springer, vol. 62(2), pages 139-151, August.
    6. Baik, Kyung Hwan & Lee, Sanghack, 2000. "Two-Stage Rent-Seeking Contests with Carryovers," Public Choice, Springer, vol. 103(3-4), pages 285-296, June.
    7. Sunder, S., 1992. "Experimental Asset Markets: A Survey," GSIA Working Papers 1992-19, Carnegie Mellon University, Tepper School of Business.
    8. 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.
    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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