Rent-seeking for a risky rent: A model and experimental investigation

Ayse Öncüler, Rachel Croson

Research output: Contribution to journalReview article

23 Scopus citations

Abstract

Rent-seeking models have been used to predict and explain a wide variety of political decisions. This paper extends Tullock's classic rent-seeking model to the case of a risky rent, where the winner of the rent-seeking contest does not receive the rent for sure, but only probabilistically. We derive the equilibrium and comparative static predictions from our extended model and present the results of an experiment with subjects from the US and Turkey to test it. Results are consistent with the comparative static predictions of the model, although we observe significantly more absolute levels of rent-seeking than the model predicts, consistent with previous experimental results. We conclude by discussing implications of our results for a variety of rent-seeking settings.

Original languageEnglish (US)
Pages (from-to)403-429
Number of pages27
JournalJournal of Theoretical Politics
Volume17
Issue number4
DOIs
StatePublished - Oct 1 2005
Externally publishedYes

Keywords

  • Experiment
  • Inefficiency
  • Political decision-making
  • Rent-seeking

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