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In this lobbying game, each player chooses a lobbying "effort" that represents
real resources used in an attempt to obtain a prize (e.g. a broadcasting license). The prize value is a specified
dollar value, and the probability of obtaining the prize is equal to one's lobbying effort as a proportion
of the total effort for the group as a whole. Rent seeking activity entails
real resource costs that dissipate the amount
of value transferred to the recipient of the prize.
A reduction in lobbying costs will typically increase the amount of lobbying
effort, which is the basis for the default class setup.
 | | | | | | The experiment can be used to motivate a discussion of the choice between non-market allocations and market allocations like auctions.
In advanced classes, the
efforts can be compared with Nash/Cournot predictions.
For a hand-run setup done with playing cards, see
Goeree and Holt (1999) "Rent Seeking and the Inefficiency of Non-Market Allocations,"
JEP. |
Vecon Lab - September 5, 2008 |