Public Choice

, Volume 63, Issue 2, pp 101–112

Conflict and rent-seeking success functions: Ratio vs. difference models of relative success

  • Jack Hirshleifer
Article

Abstract

The rent-seeking competitions studied by economists fall within a much broader category of conflict interactions that also includes military combats, election campaigns, industrial disputes, lawsuits, and sibling rivalries. In the rent-seeking literature, each party's success pi (which can be interpreted either as the probability of victory or as the proportion of the prize won) has usually been taken to be a function of the ratio of the respective resource commitments. Alternatively, however, pi may instead be a function of the difference between the parties' commitments to the contest. The Contest Success Function (CSF) for the difference from is a logistic curve in which, as is consistent with military experience, increasing returns apply up to an inflection point at equal resource commitments. A crucial flaw of the traditional ratio model is that neither onesided submission nor two-sided peace between the parties can ever occur as a Cournot equilibrium. In contrast, both of these outcomes are entirely consistent with a model in which success is a function of the difference between the parties' resource commitments.

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Copyright information

© Kluwer Academic Publishers 1989

Authors and Affiliations

  • Jack Hirshleifer
    • 1
  1. 1.Department of EconomicsUniversity of CaliforniaLos Angeles

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