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Risky rents

Author

Listed:
  • Jean-Daniel Guigou

    (University of Luxembourg (LSF))

  • Bruno Lovat

    (Université de Lorraine (BETA-CNRS))

  • Nicolas Treich

    (University Toulouse Capitole)

Abstract

We consider a strategic contest game in which risk-averse agents exert efforts to increase their share of a risky rent. We show that a unique symmetric equilibrium always exists under constant or decreasing absolute risk aversion. We also show that agents exert in general less efforts when they are more risk averse or when the rent is more risky.

Suggested Citation

  • Jean-Daniel Guigou & Bruno Lovat & Nicolas Treich, 2017. "Risky rents," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 5(2), pages 151-164, October.
    • Handle: RePEc:spr:etbull:v:5:y:2017:i:2:d:10.1007_s40505-016-0109-9
    DOI: 10.1007/s40505-016-0109-9
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    References listed on IDEAS

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    Cited by:

    1. Stracke, Rudi & Kerschbamer, Rudolf & Sunde, Uwe, 2017. "Coping with complexity – Experimental evidence for narrow bracketing in multi-stage contests," European Economic Review, Elsevier, vol. 98(C), pages 264-281.

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    More about this item

    Keywords

    Contest; Rent seeking; Risk; Risk aversion; Shared rents;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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