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Reciprocal rent-seeking contests

  • Hiroyuki Sano

    ()

We construct a model in which all rational rent-seekers may be willing to accept a negative payoff in a Tullock contest in which the rent-seekers are driven by reciprocity motives. We show that in the reciprocal Tullock contest, a unique reciprocity equilibrium exists if the reciprocal concerns of rent-seekers are sufficiently small relative to their material concerns, and that otherwise, there are two reciprocity equilibria: a destructive equilibrium and a constructive equilibrium. The individual rent-seeking expenditure in the former equilibrium is more than that in the Nash equilibrium in the original Tullock contest; moreover, over-dissipation can occur in a destructive equilibrium even in the case of constant returns to expenditure. These results derived from our reciprocal contest model are consistent with observations in most existing experimental studies on the Tullock contest. Copyright Springer-Verlag Berlin Heidelberg 2014

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File URL: http://hdl.handle.net/10.1007/s00355-013-0742-2
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Article provided by Springer in its journal Social Choice and Welfare.

Volume (Year): 42 (2014)
Issue (Month): 3 (March)
Pages: 575-596

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Handle: RePEc:spr:sochwe:v:42:y:2014:i:3:p:575-596
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  1. John Cadigan & Pamela Schmitt & Kurtis Swope & Robert Shupp, 2004. "Multi-Period Rent-Seeking Contests with Carryover: Theory and Experimental Evidence," Departmental Working Papers 5, United States Naval Academy Department of Economics.
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  17. Thomas Riechmann, 2007. "An analysis of rent-seeking games with relative-payoff maximizers," Public Choice, Springer, vol. 133(1), pages 147-155, October.
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