Abstract

http://ssrn.com/abstract=2138351
 


 



Returns to Effort in Rent-Seeking Games


Giuseppe Dari-Mattiacci


University of Amsterdam - Amsterdam Center for Law and Economics (ACLE); Tinbergen Institute

Francesco Parisi


University of Minnesota - Law School; University of Bologna

July 19, 2012

Public Choice 2014
Minnesota Legal Studies Research Paper No. 12-37
Amsterdam Law School Research Paper No. 2012-83
Amsterdam Center for Law & Economics Working Paper No. 2012-06

Abstract:     
In the traditional formulation of rent-seeking games, increasing returns to effort are characterized by an exponent r > 1. However,when the value of rent is normalized to 1, the players’ effort levels A and B will typically be less than 1. Thus, when A < 1 and r > 1, the value of Ar decreases as r increases, contradicting the interpretation of r > 1 as representing increasing returns to effort. This apparent defect in the mathematization of the problem seems to suggest that a different interpretation of r is required where A < 1, upsetting the uniformity and elegance of the model. In this short note, we demonstrate that the perceived problem is illusory, and that the usual interpretation of r is satisfactory for all values of A.

Keywords: rent-seeking games, returns to effort, normalization of values

JEL Classification: D72

Accepted Paper Series


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Date posted: August 29, 2012 ; Last revised: March 23, 2014

Suggested Citation

Dari-Mattiacci, Giuseppe and Parisi, Francesco, Returns to Effort in Rent-Seeking Games (July 19, 2012). Minnesota Legal Studies Research Paper No. 12-37; Public Choice 2014; Minnesota Legal Studies Research Paper No. 12-37; Amsterdam Law School Research Paper No. 2012-83; Amsterdam Center for Law & Economics Working Paper No. 2012-06. Available at SSRN: http://ssrn.com/abstract=2138351 or http://dx.doi.org/10.2139/ssrn.2138351

Contact Information

Giuseppe Dari-Mattiacci
University of Amsterdam - Amsterdam Center for Law and Economics (ACLE) ( email )
Roeterstraat 11
Amsterdam, 1018WB
Netherlands
HOME PAGE: http://darimattiacci.acle.nl
Tinbergen Institute
Roetersstraat 31
Amsterdam, 1018 WB
Netherlands
HOME PAGE: http://scholar.google.com/citations?user=AuUfjxUAAAAJ&hl=en
Francesco Parisi (Contact Author)
University of Minnesota - Law School ( email )
229 19th Avenue South
Minneapolis, MN 55455
United States
University of Bologna ( email )
Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy
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