Toomas Hinnosaar (CCA)
10 October 2016 @ 12:45
- Past event
“Rent-seeking contest design”
Abstract
This paper studies the relationship between information, incentives, and outcomes in rent-seeking contests. A common solution to limiting socially wasteful rent-seeking activities is transparency. I show that information strictly increases efforts in rent-seeking contests. Thus, the socially optimal rent-seeking contest provides as little information as possible about the competition. The model and the methodology developed here applies to many other applications, including advertisement, R&D races, and political contests.