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Risk-Aversion and Prudence in Rent-Seeking Games

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  • Treich, Nicolas

Abstract

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.

Suggested Citation

  • Treich, Nicolas, 2009. "Risk-Aversion and Prudence in Rent-Seeking Games," TSE Working Papers 09-013, Toulouse School of Economics (TSE).
  • Handle: RePEc:tse:wpaper:22139
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    References listed on IDEAS

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    More about this item

    Keywords

    risk-aversion; rent-seeking; lobbying; uncertainty;

    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
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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