RENTSEEKING BY PLAYERS WITH CONSTANT ABSOLUTE RISK AVERSION

Richard Cornes and Roger Hartley

No 2000/14, Keele Department of Economics Discussion Papers (1995-2001) from Department of Economics, Keele University

Abstract: We introduce a novel method of modelling Tullock rent-seeking contests that avoids the complexities encountered by the ‘best response function’ approach. We analyse contests in which there are many risk averse players differing in their attitudes to risk. We establish that, if every player has a constant degree of absolute risk aversion, a unique equilibrium exists. We also establish comparative static results and examine how the level of rent dissipation is affected by the heterogeneity of attitudes towards risk and the precise nature of the technology.

JEL-codes: C72 D72 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2000, Revised 2001-01
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Published in Public Choice, 2003, Vol. 117, pages 1-25.

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