Rent Leaving

  • Bruno S. Frey
  • Iris Bohnet
Conference paper

Abstract

Economic rents are the driving force of market economies. Resource owners constantly look for opportunities to create and exploit economic rents which, however, in the dynamics of the market process dissipate as new entrants try to appropriate the profits. In equilibrium, economic rents are eliminated. Not so in different institutional settings. While rents in the market endogenously come and go, they are artificially created and sustained in political and bureaucratic decisionmaking. In analogy to individuals’ behaviour in the market, it is assumed that politicians, bureaucrats, pressure groups, voters and taxpayers strive for political rents. Rent seeking in the political arena may also increase an individual’s income but in contrast to the market, is not socially beneficial. “The term rent seeking is designed to describe behavior in institutional settings where individual efforts to maximize value generate social waste rather than social surplus” (Buchanan 1980, 4).

Keywords

Public Good Intrinsic Motivation Public Good Game Dictator Game Cheap Talk 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
This is a preview of subscription content, log in to check access.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Amabile, T. (1983): The Social Psychology of Creativity, New York: Springer.Google Scholar
  2. Andreoni, J. (1988): Why Free Ride? Strategies and Learning in Public Goods Experiments; in: Journal of Public Economics, 37, 291–304.CrossRefGoogle Scholar
  3. Andreoni, J. (1990): Impure Altruism and Donations to Public Goods: A Theory of Warm Glow Giving; in: The Economic Journal, 100, 464–477.CrossRefGoogle Scholar
  4. Becker, G. S. (1974): A Theory of Social Interactions; in: Journal of Political Economy, 82, 1063–1093.CrossRefGoogle Scholar
  5. Becker, G. S. (1992): Habits, Addictions, and Traditions; in: Kyklos, 45, 327–345.CrossRefGoogle Scholar
  6. Bohnet, I. (1997a): Identifikation als institutionelle Bedingung individueller Kooperation: Theorie und Experimente, in: D. Aufderheide and M. Dabrowski (eds.), Wirtschaftsethik und Moralökonomik: Beiträge zur Umsetzung ordnungsethischer Erkenntnisse, forthcoming.Google Scholar
  7. Bohnet, I. (1997b): Kooperation und Kommunikation. Eine ökonomische Analyse individueller Entscheidungen, Mohr (Siebeck): Tübingen.Google Scholar
  8. Braver, S. L. and L.A. Wilson (1986): Choices in Social Dilemmas: Effects of Communication within Subgroups; in: Journal of Conflict Resolution, 30, 51–62.CrossRefGoogle Scholar
  9. Buchanan, J. M. (1980): Reform in the Rent-Seeking Society; in: J. M. Buchanan, R. D. Tollison and G. Tullock (eds.), Toward a Theory of the Rent-Seeking Society, Texas A&M University Press: College Station.Google Scholar
  10. Cameron, J. and W. D. Pierce (1994): Reinforcement, Reward, and Intrinsic Motivation: A Meta-Analysis; Review of Educational Research, 64 (Fall), 363–423.Google Scholar
  11. Caporael, L. R., R. M. Dawes, J. M. Orbell and A. J.C. van de Kragt (1989): Selfishness Examined: Cooperation in the Absence of Egoistic Incentives; in: Behavioral and Brain Sciences, 12, 683–739.CrossRefGoogle Scholar
  12. Clothfelter, C. T. (1985): Federal Tax Policy and Charitable Giving, Chicago: University of Chicago Press.Google Scholar
  13. Coleman, J. S. (1990): Foundations of Social Theory, Cambridge, MA: Harvard University Press.Google Scholar
  14. Deci, E. L. (1971): Effects of Externally Mediated Rewards on Intrinsic Motivation; in: Journal of Personality and Social Psychology, 18(1), 105–15.CrossRefGoogle Scholar
  15. Deci, E. L. with R. Fiaste (1995): Why We Do What We Do. The Dynamics of Personal Autonomy; New York: Putnam.Google Scholar
  16. Deci, E. L. and R. M. Ryan (1985): Intrinsic Motivation and Self-Determination in Google Scholar
  17. Human Behaviour, New York: Plenum Press.Google Scholar
  18. Diekmann, A. (1996): Homo Ökonomicus. Anwendungen und Probleme der Theorie rationalen Handelns im Umweltbereich, Kölner Zeitschrift für Soziologie und Sozialpsychologie, 36 (Sonderheft); also published in: A. Diekmann and C. C. Jaeger (eds.), Umweltsoziologie, Opladen: Westdeutscher Verlag, 1996, 89–118.Google Scholar
  19. Eichenberger, R. and F. Oberholzer-Gee (1997): Rational Moralists: The Role of Fairness in Democratic Economic Politics; Mimeo, University of Zurich.Google Scholar
  20. Eisenberger, R. and J. Cameron (1996): Detrimental Effects of Reward. Reality or Myth? in: American Psychologist, 51 (Nov), 1153–1166.Google Scholar
  21. Farrell, J. and M. Rabin (1996): Cheap Talk; in: Journal of Economic Perspectives, 10 (summer), 103–118.CrossRefGoogle Scholar
  22. Frank, R. H. (1988): Passions Within Reason, New York: W.W. Norton.Google Scholar
  23. Frey, B. S. (1997a): Not Just for the Money. An Economic Theory of Personal Motivation; Edward Elgar, Cheltenham, U.K. and Brookfield, USA.Google Scholar
  24. Frey, B. S. (1997b): A Constitution for Knaves Crowds Out Civic Virtues; in: Economic Journal, forthcoming.Google Scholar
  25. Frey, B. S. and I. Bohnet (1995): Institutions Affect Fairness: Experimental Investigations; in: Journal of Institutional and Theoretical Economics, 151 (June), 286–303.Google Scholar
  26. Frey, B. S. and W. W. Pommerehne (1993): On the Fairness of Pricing — An Empirical Survey among the General Population; in: Journal of Economic Behavior and Organization, 20, 295–307.CrossRefGoogle Scholar
  27. Frey, B. S., F. Oberholzer-Gee and R. Eichenberger (1996): The Old Lady Visits Your Backyard: A Tale of Morals and Markets; in: Journal of Political Economy, 104(6), 193–209.CrossRefGoogle Scholar
  28. Graetz, M., J. F. Reinganum and L. L. Wilde (1986): The Tax Compliance Game: Toward an Interactive Theory of Law Enforcement; in: Journal of Law, Economics and Organization, 39, 1–32.Google Scholar
  29. Granovetter, M. (1985): Economic Action and Social Structure: The Problem of Imbeddedness; in: American Journal of Sociology, 91, 481–510.CrossRefGoogle Scholar
  30. Hirschman, A. O. (1982): Rival Interpretations of Market Society: Civilizing, Destructive, or Feeble?; in: Journal of Economic Literature, 20(Dec), 1463–1484.Google Scholar
  31. Hodgkinson, V. A. and M. S. Weitzman (1994): Giving and Volunteering in the United States, Washington: Independent Sector.Google Scholar
  32. Isaac, R.M., D. Schmitz and J. M. Walker (1986): The Assurance Problem in a Laboratory Market; in: Public Choice, 62, 217–236.CrossRefGoogle Scholar
  33. Kahneman, D., J. Knetsch and R. Thaler (1986): Fairness and the Assumption of Economics; in: Journal of Business, 59, 285–300.CrossRefGoogle Scholar
  34. Khanna, J., J. Posnett and T. Sandler (1995): Charity Donations in the UK: New Evidence based on Panel Data; in: Journal of Public Economics, 56, 257–272.CrossRefGoogle Scholar
  35. Kingma, B. R. (1989): An Accurate Measurement of the Crowd-out Effect, Income Effect, and Price Effect for Charitable Contributions; in: Journal of Political Economy, 97, 1197–1207.CrossRefGoogle Scholar
  36. Koestner, R., R. M. Ryan, F. Bernieri and K. Holt (1984): Setting Limits on Children’s Behavior: The Differential Effects of Controlling vs. Informational Styles on Intrinsic Motivation and Creativity; in: Journal of Personality, 52(3) (September), 233–248.CrossRefGoogle Scholar
  37. Kramer, R. M. and T. R. Tyler (eds.) (1996): Trust in Organizations, Sage: Thousand Oaks.Google Scholar
  38. Kunreuther, H. and D. Easterling (1990): Are Risk Benefit Tradeoffs Possible in Siting Hazardous Facilities?; American Economic Review, 80 (May), 252–56.Google Scholar
  39. Lane, R. E. (1991): The Market Experience, Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  40. Ledyard, J. (1995): Public Goods; in: J. Kagel and A. E. Roth (eds.), Handbook of Experimental Economics, Princeton: Princeton University Press, pp. 111–194.Google Scholar
  41. Macy, M. W. (1991): Chains of Cooperation: Threshold Effects in Collective Action; American Sociological Review, 56, 730–747.CrossRefGoogle Scholar
  42. North, D. C. (1990): Institutions, institutional Change, and Economic Performance, Cambridge: Cambridge University Press.Google Scholar
  43. Oberholzer-Gee, F., I. Bohnet and B. S. Frey (1996): Fairness and Competence in Democratic Decisions; in: Public Choice, 91, 89–105.CrossRefGoogle Scholar
  44. Ostrom, E., R. Gardner and J. Walker (1994): Rules, Games, and Common-Pool Resources, University of Michigan Press: Ann Arbor.Google Scholar
  45. Pommerehne, W.W., A. Hart and B. S. Frey (1994): Tax Morale, Tax Evasion and the Choice of Policy Instruments in Different Political Systems; in: Public Finance, 49, 52–69.Google Scholar
  46. Robinson, P.H. and J.M. Darley (1995): The utility of desert; Working paper, Northwestern University School of Law.Google Scholar
  47. Rose-Ackerman, S. (1996): Altruism, Nonprofits and Economic Theory; in: Journal of Economic Literature, 34, 701–728.Google Scholar
  48. Rotter, J. B. (1966): Generalized Expectancies for Internal versus External Control of Reinforcement; in: Psychological Monographs, 80 (1, Whole No. 609).Google Scholar
  49. Salamon, L. and H. K. Anheimer (1994): The Emerging Sector: The Nonprofit Sector in Comparative Perspective — An Overview; John Hopkins University Institute for Policy Studies, Baltimore.Google Scholar
  50. Sally, D. (1995): Conversation and Cooperation in Social Dilemmas; in: Rationality and Society, 7, 58–92.CrossRefGoogle Scholar
  51. Sen, A. K. (1967): Isolation, Assurance and the Social Rate of Discount; in: Quarterly Journal of Economics, 81, 112–124.CrossRefGoogle Scholar
  52. Sen, A. K. (1977): Rational Fools: A Critique of the Behavioral Foundations of Economic Theory; in: Philosophy and Public Affairs, 6, 317–44.Google Scholar
  53. Shapiro, C. and J. E. Stiglitz (1984): Equilibrium Unemployment as a Worker Discipline Device; in: American Economic Review, 74(June), 433–44.Google Scholar
  54. Slemrod, J. (ed.) (1992): Why People Pay Taxes. Tax Complianc and Enforcement, University of Michigan Press, Ann Arbor.Google Scholar
  55. Smith, V. L. and J. M. Walker (1993): Monetary Rewards and Decision Cost in Experimental Economics; in: Economic Inquiry, 31, 245–261.CrossRefGoogle Scholar
  56. Turner, J. C. (1987): Rediscovering the Social Group, Oxford: Oxford University Press.Google Scholar
  57. Tyler, T. R. (1990): Why People Obey the Law, New Haven and London: Yale University Press.Google Scholar
  58. Tyler, T.R. (1997): Procedural fairness and compliance with the law; in: Swiss Journal for Economics and Statistics, forthcoming.Google Scholar

Copyright information

© Springer-Verlag Berlin — Heidelberg 2000

Authors and Affiliations

  • Bruno S. Frey
  • Iris Bohnet

There are no affiliations available

Personalised recommendations