THE SIZE OF THE PRIZE: TESTING RENT-DISSIPATION WHEN TRANSFER QUANTITY IS ENDOGENOUS
David Bullock () and
No 20447, 2001 Annual meeting, August 5-8, Chicago, IL from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)
We present a transfer-seeking model of political economy in which the size of the transfer is determined endogenously, and in which over-dissipation of rents is predicted even under conditions of risk-neutrality and perfect rationality. We implement an empirical test of this model by collecting behavioral data in a laboratory experiment. We confirm the existence of behavior that leads to over-dissipation of rents in games with both symmetric and asymmetric political power. We also confirm the hypotheses that lowering the political power of one player can lead to smaller rent-seeking expenditures and to larger transfers. We observe behavior that deviates from dominant strategies.
Keywords: Political; Economy (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea01:20447
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