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Risk-aversion and Prudence in Rent-seeking Games

  • TREICH Nicolas

This paper considers a common n-agent symmetric rent-seeking game. It derives conditions so that risk-aversion and risk always decrease rent-seeking efforts. These conditions hold for any regular contest success function when risk-averse rent-seekers are also prudent. Under n = 2, prudence is a necessary and sufficient condition for risk-aversion to decrease rent-seeking efforts compared to risk-neutrality. An intuition for this result is given based on a self-protection model.

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Paper provided by LERNA, University of Toulouse in its series LERNA Working Papers with number 09.05.281.

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Date of creation: Feb 2009
Date of revision:
Handle: RePEc:ler:wpaper:09.05.281
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