Loss Aversion and the Tullock Paradox

University of Nottingham Economics Discussion Paper No. 03/17

Posted: 30 Jun 2004  

Richard C. Cornes

Australian National University (ANU) - Faculty of Economics & Commerce; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: September 2003

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.

JEL Classification: C72, D72, D80

Suggested Citation

Cornes, Richard C., Loss Aversion and the Tullock Paradox (September 2003). University of Nottingham Economics Discussion Paper No. 03/17. Available at SSRN: https://ssrn.com/abstract=467901

Richard C. Cornes (Contact Author)

Australian National University (ANU) - Faculty of Economics & Commerce ( email )

Canberra, Australian Capital Territory 2601
Australia

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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