Rent seeking and rent dissipation: A neutrality result

• Published in: Journal of public economics Vol. 94; no. 1; pp. 1 - 7
• Main Authors: Alcalde, José, Dahm, Matthias
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01-02-2010; Elsevier
• Series: Journal of Public Economics
• Subjects: (Non-)deterministic contest; (Non-)deterministic contest All-pay auction Contest success functions; All-pay auction; Auctions; Contest success functions; Equilibrium; Game theory; Institutions; Pay-off; Probability; Rent-seeking; D44 (Auctions); D72 (Economic Models of Political Processes: Rent Seeking, Elections); All-pay auction; Contest success functions; C72 (Noncooperative Games); (Non-)deterministic contest
• ISSN: 0047-2727; 1879-2316
• DOI: 10.1016/j.jpubeco.2009.11.005

We consider rent seeking contests between at least two agents who might value the prize differently. We capture a wide range of institutional aspects of contests by analyzing a class of contest success functions fulfilling several properties. The main properties are anonymity and a condition on the elasticity of a rent seeker's win probability with respect to her effort. We show the existence of a mixed-strategy equilibrium and establish equilibrium payoffs. In this equilibrium complete rent dissipation holds. Our results imply a partial robustness result for the all-pay auction.