Varying the Intensity of Competition in a Multiple Prize Rent Seeking Experiment

Lisa Anderson and Beth Freeborn

No 75, Working Papers from Department of Economics, College of William and Mary

Abstract: We experimentally test a rent seeking model under five levels of competition. At one extreme, a subject’s probability of winning a prize is equal to her share of the total expenditures. At lower levels of competition, a subject’s probability of winning is affected more by her own expenditures than by the expenditures of others. Predicted expenditure levels are positively associated with higher levels of competition. Consistent with previous rent seeking experiments, we find that subjects spend significantly more than the Nash equilibrium prediction at all levels of competition. However, expenditure patterns generally follow the Nash prediction; expenditures decrease as the level of competition decreases. Our experimental design also includes a lottery choice experiment to control for subjects’ risk preference. We find that subjects who are more risk averse spend significantly less in the contest and this effect is particularly strong for female subjects

Keywords: rent seeking; experiment; rent dissipation; political competition (search for similar items in EconPapers)
JEL-codes: C9 D72 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2008-08-15
New Economics Papers: this item is included in nep-com, nep-exp, nep-mic and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Varying the intensity of competition in a multiple prize rent seeking experiment (2010)
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