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The Size Of The Prize: Testing Rent-Dissipation When Transfer Quantity Is Endogenous

  • Bullock, David S.
  • Rutstrom, Elisabet E.

We present a transfer-seeking model of political economy in which the size of the transfer is determined endogenously, and in which over-dissipation of rents is predicted even under conditions of risk-neutrality and perfect rationality. We implement an empirical test of this model by collecting behavioral data in a laboratory experiment. We confirm the existence of behavior that leads to over-dissipation of rents in games with both symmetric and asymmetric political power. We also confirm the hypotheses that lowering the political power of one player can lead to smaller rent-seeking expenditures and to larger transfers. We observe behavior that deviates from dominant strategies.

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File URL: http://purl.umn.edu/20447
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Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2001 Annual meeting, August 5-8, Chicago, IL with number 20447.

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Date of creation: 2001
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Handle: RePEc:ags:aaea01:20447
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