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An approximate solution to rent-seeking contests with private information

Andrea Gallice ()

European Journal of Operational Research, 2017, vol. 256, issue 2, 673-684

Abstract: We propose an approximate solution to rent-seeking contests in which participants have heterogeneous and private valuations. The procedure only requires common knowledge about the mean of the distribution of valuations. We obtain a closed-form expression for an agent’s level of investment and subject it to comparative statics analysis. We then assess the performance of the model and find that the proposed solution provides a remarkably effective approximation of the optimal solution for a wide range of parameter specifications.

Keywords: Rent-seeking contests; Private information; Approximate solution; Behavioural OR (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.ejor.2016.07.039

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