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Rentseeking By Players With Constant Absolute Risk Aversion

Author

Listed:
  • Richard Cornes

    (School of Economics, University of Nottingham,)

  • Roger Hartley

    () (Department of Economics Keele University)

Abstract

We introduce a novel method of modelling Tullock rent-seeking contests that avoids the complexities encountered by the ‘best response function’ approach. We analyse contests in which there are many risk averse players differing in their attitudes to risk. We establish that, if every player has a constant degree of absolute risk aversion, a unique equilibrium exists. We also establish comparative static results and examine how the level of rent dissipation is affected by the heterogeneity of attitudes towards risk and the precise nature of the technology.

Suggested Citation

  • Richard Cornes & Roger Hartley, 2000. "Rentseeking By Players With Constant Absolute Risk Aversion," Keele Department of Economics Discussion Papers (1995-2001) 2000/14, Department of Economics, Keele University, revised Jan 2001.
  • Handle: RePEc:kee:keeldp:2000/14
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    File URL: http://www.keele.ac.uk/depts/ec/wpapers/0014.pdf
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    Cited by:

    1. Konrad, Kai A., 2007. "Strategy in contests: an introduction
      [Strategie in Turnieren – eine Einführung]
      ," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, Social Science Research Center Berlin (WZB).

    More about this item

    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

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