Reexamining efficient rent-seeking in laboratory markets
Given Millner and Pratt's (1989) finding of behavior inconsistent with theory, we reexamine efficient rent-seeking in experimental markets. We show that (a) when r = 3, no Nash equilibrium exists and therefore behavior has no theoretical benchmark to judge consistency, and (b) when r = 1, with a new experimental design utilizing an explicit expected payoff matrix, rent-seeking behavior is consistent with both Nash equilibrium and dissipation hypotheses.
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