Loss Aversion and the Tullock Paradox

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

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Year of publication:	2003-10
Authors:	Hartley, Roger ; Cornes, Richard
Institutions:	Centre for Economic Research, School of Economics and Management Studies

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Extent:	application/pdf
Series:	Keele Economics Research Papers. - ISSN 1740-231X.
Type of publication:	Book / Working Paper
Notes:	The text is part of a series Keele University, Department of Economics Discussion Papers Number KERP 2003/06 30 pages
Classification:	C72 - Noncooperative Games ; D72 - Economic Models of Political Processes: Rent-Seeking, Elections, Legistures, and Voting Behavior ; D80 - Information and Uncertainty. General
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005416711