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Loss Aversion and the Tullock Paradox

Author

Listed:
  • Richard Cornes

    (School of Economics, University of Nottingham,)

  • Roger Hartley

    (Keele University Department of Economics)

Abstract

We show that the presence of loss aversion on the part of participants in a Tullock imperfectly discriminating contest will significantly reduce the proportion of the rent dissipated in the form of resources used up in the competition for that rent. We also suggest a simple experiment that can reveal whether contestants are, indeed, loss averse. Keywords Rent-seeking, contests, loss aversion, rent dissipation

Suggested Citation

  • Richard Cornes & Roger Hartley, 2003. "Loss Aversion and the Tullock Paradox," Keele Economics Research Papers KERP 2003/06, Centre for Economic Research, Keele University.
    • Handle: RePEc:kee:kerpuk:2003/06
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    File URL: http://www.keele.ac.uk/depts/ec/wpapers/kerp0306.pdf
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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