Loss Aversion and the Tullock Paradox
University of Nottingham Economics Discussion Paper No. 03/17
Posted: 30 Jun 2004
Date Written: September 2003
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: Suggested Citation