Rent-Seeking for a Risky Rent A Model and Experimental Investigation

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

Intertemporal choice under uncertainty: A behavioral perspective

This dissertation explores the relationship between delay and uncertainty in risky intertemporal decision-making. In the first part, I investigate the interaction between delay and uncertainty effects. Contrary to normative predictions, I find that delay and risk discounting are not independent from each other. In particular, the delay discount rate increases for uncertain future outcomes and the risk discount rate decreases with an increase in delay. Thus individuals are more impatient for gambles than for certain outcomes and less risk-averse (more risk-neutral) for delayed outcomes than for immediate ones. The findings also suggest that the simultaneous presence of delay and uncertainty leads to a higher discounting of risky future outcomes than predicted by either effect separately. The second part of the dissertation focuses on two applications of this result: risk mitigation investments in individual decision-making and new product development in managerial decision-making. Based on the general framework developed in the first part, I examine the interaction between delay and uncertainty in these two domains. In both applications, I find little empirical support for the normative prediction that the effects of delay and uncertainty are independent of each other. The results are consistent with the findings from Part I. In the first study, a comparative analysis of risk mitigation measures and energy-efficiency reveals that investments with a risky stream of future benefits (e.g. risk mitigation) are discounted more heavily than those with a certain stream of future benefits (e.g. energy efficiency). This is consistent with the result that individuals are more impatient for risky outcomes than for certain ones. The second study, which focuses on new product development, shows that the effect of delay and uncertainty is in the same direction as in the generalized case, leading to more discounting than either effect separately would predict. The dissertation concludes that the time and risk preferences depend on each other and the interaction between delay and uncertainty causes a higher discounting of risky future outcomes than predicted by either effect separately

Intertemporal choice under uncertainty: A behavioral perspective

This dissertation explores the relationship between delay and uncertainty in risky intertemporal decision-making. In the first part, I investigate the interaction between delay and uncertainty effects. Contrary to normative predictions, I find that delay and risk discounting are not independent from each other. In particular, the delay discount rate increases for uncertain future outcomes and the risk discount rate decreases with an increase in delay. Thus individuals are more impatient for gambles than for certain outcomes and less risk-averse (more risk-neutral) for delayed outcomes than for immediate ones. The findings also suggest that the simultaneous presence of delay and uncertainty leads to a higher discounting of risky future outcomes than predicted by either effect separately. The second part of the dissertation focuses on two applications of this result: risk mitigation investments in individual decision-making and new product development in managerial decision-making. Based on the general framework developed in the first part, I examine the interaction between delay and uncertainty in these two domains. In both applications, I find little empirical support for the normative prediction that the effects of delay and uncertainty are independent of each other. The results are consistent with the findings from Part I. In the first study, a comparative analysis of risk mitigation measures and energy-efficiency reveals that investments with a risky stream of future benefits (e.g. risk mitigation) are discounted more heavily than those with a certain stream of future benefits (e.g. energy efficiency). This is consistent with the result that individuals are more impatient for risky outcomes than for certain ones. The second study, which focuses on new product development, shows that the effect of delay and uncertainty is in the same direction as in the generalized case, leading to more discounting than either effect separately would predict. The dissertation concludes that the time and risk preferences depend on each other and the interaction between delay and uncertainty causes a higher discounting of risky future outcomes than predicted by either effect separately

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

SIGLEAvailable from INIST (FR), Document Supply Service, under shelf-number : DO 6373 / INIST-CNRS - Institut de l'Information Scientifique et TechniqueFRFranc

Status as a valued resource

SIGLEAvailable from INIST (FR), Document Supply Service, under shelf-number : DO 6953 / INIST-CNRS - Institut de l'Information Scientifique et TechniqueFRFranc