Risk-Aversion and Prudence in Rent-Seeking Games

Résumé

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.

Mots-clés

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

Codes JEL

C72: Noncooperative Games
D72: Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
D81: Criteria for Decision-Making under Risk and Uncertainty