An experimental examination of rational rent-seeking

Abstract

An experimental examination of rational rentseekingPotters, J.J.M.; de Vries, C.G.; van Winden, F.A.A.M. Published in: European Journal of Political EconomyPublication date: 1998 Link to publication Citation for published version (APA):Potters, J. J. M., de Vries, C. G., & van Winden, F. A. A. M. (1998). An experimental examination of rational rentseeking. European Journal of Political Economy, 14(4), 783-800. General rightsCopyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights.-Users may download and print one copy of any publication from the public portal for the purpose of private study or research -You may not further distribute the material or use it for any profit-making activity or commercial gain -You may freely distribute the URL identifying the publication in the public portal Take down policy If you believe that this document breaches copyright, please contact us providing details, and we will remove access to the work immediately and investigate your claim. AbstractThe theoretical literature exploring various ramifications and applications of Tullock's Ž . 1980 rent-seeking model is extensive and rapidly growing. In contrast, there exist as yet only a few experimental evaluations of this model, with ambiguous results. Moreover, these Ž . studies focus on one particular case proportional probabilities and use a problematic experimental design. With an appropriate design we investigate the extreme cases of proportional probabilities and perfect discrimination, which offer the starkest contrast in theoretical predictions. We find substantial evidence for the predictive power of the rent-seeking model, particularly if one allows for the fact that people sometimes make mistakes or are confused about what to do. q 1998 Elsevier Science B.V. All rights reserved. JEL classification: D72; C91Keywords: Rent-seeking model; Experimental tests ) Corresponding author. Tel.: q31-020-5254251; Fax: q31-020-5255283; E-mail: fvwinden@fee.uva.nl 0176-2680r98r$ -see front matter q 1998 Elsevier Science B.V. All rights reserved.Ž . PII: S 0 1 7 6 -2 6 8 0 9 8 0 0 0 3 7 -8

Can groups solve the problem of over-bidding in contests?

“…Figure 4.2 shows that instead of a single-point equilibrium of 22.5, bids range from 0 to 120. A high variance in individual bids is consistent with previous experimental findings of the contest literature Pratt, 1989, 1991;Davis and Reilly, 1998;Potters et al, 1998;Sheremeta, 2009a, b). This puzzling observation produces a challenge for existing contest theory (Cornes and Hartley, 2005).…”

Resource Allocation Contests: Experimental Evidence

“…There are, however, experiments from the rent seeking literature, including those by Pratt (1989, 1991), Shogren and Baik (1991), Davis and Reilly (1998), Potters et al (1998) and Önçüler and Croson (1998), which investigate singleprize contests under various experimental settings. All of these settings, however, involve repeated play of a single-prize contest and are therefore not truly one-shot as in this study.…”

“…8 Several of these experiments use random matching protocols to simulate a one-shot setting. See for example Potters et al (1998). 9 This study also involved multiple-prize contests, but they differ from the multiple-prize contest in this study by allowing only one prize per participant.…”

Experimental Public Choice

“…The main experimental studies on rent-seeking are Millner and Pratt, 1989, Davis and Reilly (1998), Potters et al (1998), andWeimann et al (2000). Here, we will describe the experiments in Potters et al.…”