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Rent seeking with private values

In: 40 Years of Research on Rent Seeking 1

Author

Listed:
  • David A. Malueg

    (Tulane University)

  • Andrew J. Yates

    (University of Richmond)

Abstract

We study a rent-seeking contest in which the players’ valuations of the prize are private information. We determine a Bayesian equilibrium and give conditions under which the equilibrium exists. Although players are ex ante symmetric, increased possibilities for ex post lopsidedness lead to less aggressive bidding. (Lopsidedness increases as players ’ values become less positively correlated or as the variation in possible values increases.) We also compare the private-information contest to a related public-information contest in which the realizations of values are common knowledge. The contests are equally efficient and players are indifferent between the two, but risk-averse sellers of the prize are not.

Suggested Citation

  • David A. Malueg & Andrew J. Yates, 2004. "Rent seeking with private values," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 503-520, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-79182-9_36
    DOI: 10.1007/978-3-540-79182-9_36
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