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.
Keywords
risk-aversion; rent-seeking; lobbying; uncertainty;
JEL codes
- C72: Noncooperative Games
- D72: Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D81: Criteria for Decision-Making under Risk and Uncertainty
Reference
Nicolas Treich, “Risk-Aversion and Prudence in Rent-Seeking Games”, TSE Working Paper, n. 09-013, February 17, 2009.
See also
Published in
TSE Working Paper, n. 09-013, February 17, 2009