Rent, risk, and replication: preference adaptation in winner-take-all markets

Rente, Risiko und Replikation – Präferenz- Anpassung in „Der-Sieger-bekommt-alles“ Märkten

Karl Wärneryd

No FS IV 01-10, Discussion Papers, Research Unit: Market Processes and Governance from WZB Berlin Social Science Center

Abstract: We study the evolution of an economy where agents who are heterogeneous with respect to risk attitudes can either earn a certain income or enter a risky rent-seeking contest. We assume that agents behave rationally given their preferences, but that the population distribution of preferences evolves over time in response to material payoffs. We show that, in particular, initial distributions with full support converge to stationary states where all types may still be present, risk lovers specialize in rentseeking, and the available rents are perfectly dissipated.

Keywords: Preference evolution; risk attitudes; contests; winner-take-all markets (search for similar items in EconPapers)
JEL-codes: C72 D72 D80 (search for similar items in EconPapers)
Date: 2001
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Journal Article: Rent, risk, and replication: Preference adaptation in winner-take-all markets (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wzbmpg:fsiv0110

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