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Symmetric vs Asymmetric Equilibria and Stochastic Stability in a Dynamic Game of Legislative Lobbying

Raouf Boucekkine (), Fabien Prieur () and Benteng Zou ()

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Abstract: We study a 2-players stochastic dynamic symmetric lobbying differential game. Players have opposite interests; at any date, each player invests in lobbying activities to alter the legislation in her own benefit. The payoffs are quadratic and uncertainty is driven by a Wiener process. We prove that while a symmetric Markov Perfect Equilibrium (MPE) always exists, an asymmetric MPE only emerges when uncertainty is large enough. In the latter case, the legislative state converges to a stationary invariant distribution. Interestingly enough, the implications for the rent dissipation problem are much more involved than in the deterministic counterpart: the symmetric MPE still yields a limited social cost while the asymmetric may yield significant losses. We also characterize the most likely asymptotic state, in particular regarding the level of uncertainty.

Keywords: stochastic differential games; symmetric versus asymmetric equilibrium; political lobbying; stochastic stability; social cost of lobbying (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-ger, nep-hpe and nep-ore
Date: 2018-01
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Working Paper: Symmetric vs Asymmetric Equilibria and Stochastic Stability in a Dynamic Game of Legislative Lobbying (2018) Downloads
Working Paper: Symmetric vs asymmetric equilibria and stochastic stability in a dynamic game of legislative lobbying (2018) Downloads
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