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Additive Multi-Effort Contests

Kjell Hausken ()

No 2016/2, UiS Working Papers in Economics and Finance from University of Stavanger

Abstract: A rent seeking model is axiomatized and analyzed where players exert multiple additive efforts. An analytical solution is developed when the contest intensity for one effort equals one. Then additional efforts give players higher expected utilities and lower rent dissipation, which contrasts with earlier findings for multiplicative efforts. Players optimize cost effectively across efforts, cutting back on the effort with contest intensity equal to one, and exerting alternative efforts instead. This latter effort eventually decreases towards zero as new efforts are added. It may not be optimal for both players to exert all their available efforts. Accounting for solutions which have to be determined numerically, a Nash equilibrium selection method is provided.

Keywords: Rent seeking; additive efforts; axiomatization; contest success function; rent dissipation. (search for similar items in EconPapers)
JEL-codes: C70 C72 D72 D74 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2016-04-24
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