Loss Aversion and the Tullock Paradox

Richard Cornes and Roger Hartley

No KERP 2003/06, Keele Economics Research Papers from Centre for Economic Research, Keele University

Abstract: We show that the presence of loss aversion on the part of participants in a Tullock imperfectly discriminating contest will significantly reduce the proportion of the rent dissipated in the form of resources used up in the competition for that rent. We also suggest a simple experiment that can reveal whether contestants are, indeed, loss averse. Keywords Rent-seeking, contests, loss aversion, rent dissipation

JEL-codes: C72 D72 D80 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2003-10
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