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Multi-Period Rent-Seeking Contests with Carryover: Theory and Experimental Evidence

John Cadigan, Pamela Schmitt (), Kurtis Swope () and Robert Shupp
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John Cadigan: American University

Departmental Working Papers from United States Naval Academy Department of Economics

Abstract: The majority of theoretical and experimental research stemming from Tullock’s (1980) model of rent-seeking considers static, single-period contests. This paper contributes to a growing body of research on multi-period rent-seeking contests by developing and experimentally testing a model in which a player’s effort affects the probability of winning a contest in both the current and future periods. Theory predicts that rent-seeking effort will be shifted forward from later to earlier periods, with no change in overall rent-seeking expenditures relative to the static contest. Experimental results indicate a significant shift forward when “carryover” is present and that the amount shifted is directly related to the carryover rate. Finally, although experimental expenditures are greater than the equilibrium predictions, overall rent-seeking effort in the carryover contests is lower than in similar static contests.

Pages: 30 pages
Date: 2004-04
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