An approximate solution to rent-seeking contests with private information
Andrea Gallice ()
European Journal of Operational Research, 2017, vol. 256, issue 2, 673-684
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)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:256:y:2017:i:2:p:673-684
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