Asymmetric contests with risky rents

Jean-Daniel Guigou, Bruno Lovat and Marc Boissaux
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Marc Boissaux: LSF

LSF Research Working Paper Series from Luxembourg School of Finance, University of Luxembourg

Abstract: We study a rent-seeking proprtional-prize contest between two heterogeneously risk-averse players and given prize amounts are normally distributed rather than known ex ante. We establish existence and unicity of a Nash equilibrium linked to this contest, and study the equilibrium e_orts implied. We then obtain a similar equilibrium result for a winner-takes-all lottery contest within the same risky rent context, and compare optimal e_orts as well as expected utilities between the two contest types.

Date: 2013
New Economics Papers: this item is included in nep-gth and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:crf:wpaper:13-9

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