Contests with an unknown number of contestants
- 135 Downloads
This paper studies rent-seeking contests where the contestants do not know the number of actively competing contestants. Two models are compared. In the first, all players are risk neutral; in the second, all have constant absolute risk aversion. If the expected fraction of active contestants is low, an increase in the number of potential contestants increases individual rent-seeking efforts. This effect is in contrast to the complete information case where individual rent-seeking efforts decrease in the number of contestants. The effect is more likely under risk neutrality, but also possible under risk aversion. Equilibrium rent seeking efforts are lower under risk aversion if and only if the expected fraction of active contestants is low.
KeywordsContest Rent-seeking Number uncertainty Risk aversion
Unable to display preview. Download preview PDF.
- Che, Y.-K., & Gale, I.L. (1998). Caps on political lobbying. The American Economic Review, 88, 643–651.Google Scholar
- Jansen, J. (2004). Innovating Under the Radar: Investment Dynamics under Asymmetric Information. Mimeo.Google Scholar
- Janssen, M., & Rasmusen, E. (2002). Bertrand competition under uncertainty. The Journal of Industrial Economics 50(1), 11–21.s.Google Scholar
- Lagerlöf, J. (2005). A Simple Theory of Rent Seeking with Informational Foundations. Mimeo.Google Scholar
- Lockard, A., & Tullock, G. (eds.) (2000). Efficient rent-seeking: chronicle of an intellectual quagmire. Boston: Kluwer.Google Scholar
- Myerson, R.B., & Wärneryd, K. (2006). Population uncertainty in contests. Economic Theory, 27(2).Google Scholar
- Skaperdas, S. (1991). Conflict and attitudes toward risk. American Economic Review Papers and Proceedings, 81 116–120.Google Scholar
- Skaperdas, S. (1996). Contest success functions. Economic Theory 7 283–290.Google Scholar
- Tullock, G. (1980). Efficient rent seeking. In: Buchanan, J., Tollison, R., Tulock, G. (eds.), Towards a theory of the rent seeking society. College Station: Texas A&M University Press, pp. 97–112.Google Scholar