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Asymmetric contests with risky rents

Author

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  • Jean-Daniel Guigou

  • Bruno Lovat
  • Marc Boissaux

    (LSF)

Abstract

We study a rent-seeking proprtional-prize contest between two heterogeneously risk-averse players and given prize amounts are normally distributed rather than known ex ante. We establish existence and unicity of a Nash equilibrium linked to this contest, and study the equilibrium e_orts implied. We then obtain a similar equilibrium result for a winner-takes-all lottery contest within the same risky rent context, and compare optimal e_orts as well as expected utilities between the two contest types.

Suggested Citation

  • Jean-Daniel Guigou & Bruno Lovat & Marc Boissaux, 2013. "Asymmetric contests with risky rents," DEM Discussion Paper Series 13-9, Department of Economics at the University of Luxembourg.
    • Handle: RePEc:luc:wpaper:13-9
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    References listed on IDEAS

    as
    1. Alex Robson, 2012. "Contests between players with mean-variance preferences," Discussion Papers in Economics economics:201207, Griffith University, Department of Accounting, Finance and Economics.
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    7. Nicolas Treich, 2010. "Risk-aversion and prudence in rent-seeking games," Public Choice, Springer, vol. 145(3), pages 339-349, December.
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