TY - JOUR

T1 - Returns to effort in rent-seeking games

AU - Dari-Mattiacci, Giuseppe

AU - Parisi, Francesco

PY - 2014/4

Y1 - 2014/4

N2 - In the traditional formulation of rent-seeking games, increasing returns to effort are characterized by an exponent r>1. However, when the value of the 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 A r 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 whenever 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.

AB - In the traditional formulation of rent-seeking games, increasing returns to effort are characterized by an exponent r>1. However, when the value of the 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 A r 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 whenever 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.

KW - Normalization of values

KW - Rent-seeking games

KW - Returns to effort

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U2 - 10.1007/s11127-012-0020-3

DO - 10.1007/s11127-012-0020-3

M3 - Article

AN - SCOPUS:84897030473

VL - 159

SP - 99

EP - 104

JO - Public Choice

JF - Public Choice

SN - 0048-5829

IS - 1-2

ER -