wealth concentration over the path of development sweden 1873 2006 we study wealth concentration in sweden over 130 years from the beginning of industrialization until the present day our series are based on new evidence from estate and wealth tax data foreign and domestic family firm wealth and pension wealth estimates we find that swedish wealth concentration was high in the agrarian state and changed little during early industrialization from world war i until about 1950 the richest percentile lost ground to high income earners in the rest of the top wealth decile this equalization continued postwar the entire top decile lost out relative to the rest of the population around 1980 wealth compression stopped and inequality increased we approximate the effects of international flows and find that the recent increase in wealth inequality is probably larger than what official estimates suggest

the litigious plaintiff hypothesis case selection and resolution the process through which cases are selected for litigation cannot be ignored because it yields a set of lawsuits and plaintiffs that is far from a random selection either of potential claims or of potential claimants we present a theoretical framework for understanding the operation of this suit selection process and its relationship to the underlying distribution of potential claims and claimants the model has implications for the trial rate and the plaintiff win rate at trial our empirical analysis using data on over 200 000 federal civil litigations yields results that are strongly consistent with the theory

the solution to the tullock rent seeking game when r 2 mixed strategy equilibria and mean dissipation rates in tullock s rent seeking model the probability a player wins the game depends on expenditures raised to the power r we show that a symmetric mixed strategy nash equilibrium exists when r 2 and that overdissipation of rents does not arise in any nash equilibrium we derive a tight lower bound on the level of rent dissipation that arises in a symmetric equilibrium when the strategy space is discrete and show that full rent dissipation occurs when the strategy space is continuous our results are shown to be consistent with recent experimental evidence on the dissipation of rents

truth effort and the legal battle in lawsuits relative success depends upon two main factors the true degree of fault and the efforts invested on eachside a proposed litigation success function displays thisdependence while satisfying other essential properties undertwo different protocols nash cournot and stackelberg solutions are obtained for the litigation efforts proportionate success and values of the lawsuit on each side outcomes are evaluated in terms of two normative criteria i achieving justice interpreted as equality between defendantfault and relative plaintiff success and ii minimizingaggregate litigation cost achievement of these aims isdetermined by the decisiveness of litigation effort relativeto true fault

human capital inequality and economic growth some new evidence this paper provides new measures of human capital inequality for a broad panel of countries taking attainment levels from barro and lee 2001 we compute gini coefficients and the distribution of education by quintiles for 108 countries over five year intervals from 1960 to 2000 using this new cross country data on human capital inequality two main conclusions are obtained first most countries in the world have tended to reduce the inequality in human capital distribution second human capital inequality measures provide more robust results than income inequality measures in the estimation of standard growth and investment equations

imperfect patent protection and innovation the paper studies the effect of strengthening protection on r d incentives in the context of process innovation it shows that for non drastic innovations that do not render the pre existing technology obsolete the innovator might favor imitation if the expected royalty rate determined by the court is sufficiently high since imitation is discouraged for very high levels of patent protection r d investment is maximized for an intermediate level of patent strength this finding provides a theoretical explanation for emerging empirical evidence questioning the effectiveness of strengthening protection on innovation incentives it also serves as a justification for the imperfections of the existing patent system that allows for some infringement

rent seeking in general equilibrium a didactic illustration in the first part of the paper a simple general equilibrium model is developed which allows a graphic illustration of some of the basic ideas in rent seeking literature general equilibrium means that the alternative uses of available resources for both consumers and producers are made explicit the standard partial analysis of rent seeking is re interpreted in a general welfare theoretic framework thereby clarifying such diverse terms as consumer and producer surplus profits and rents to be captured the initial models of tullock and krueger are used to describe the social harm done by rent seeking activities in terms of a social cost benefit calculus

electoral information in developed stock market testing conditional heteroscedasticity in the market model this investigates the influence of major electoral information on abnormal returns around the announcement date in the developed stock market and examines whether these explanatory variables are associated with observed cumulative abnormal returns using a regression analysis the analytical results demonstrate that average abnormal returns are significantly negative before the date of the announcement of the results of a general election on days 6 and 3 and after that announcement date on days 4 6 and 10 this phenomenon can be attributed to hedging activity of the investors to reduce risk

pre industrial inequality is inequality largely the result of the industrial revolution or were preindustrial incomes as unequal as they are today for want of sufficient data these questions have not yet been answered this paper infers inequality for 30 pre industrial societies using what are known as social tables stretching from the roman empire 14 ad to byzantium in 1000 to england in 1688 to nueva espana around 1790 to china in 1880 and to british india in 1947 it applies two new concepts in making those assessments what we call the inequality possibility frontier and the inequality extraction ratio rather than simply offering measures of inequality we compare its observed level with the maximum feasible inequality or surplus that could have been extracted by the elite the results especially when compared with modern poor countries give new insights into the connection between inequality and economic development in the very long run

dissipation of contestable rents by small numbers of contenders the theory of rent seeking with its origins in the observations of gordon tullock 1967 or to use jagdish bhagwati s 1982 proposed term the theory of directly unproductive profit seeking activities is concerned with the potentially adverse effects on resource allocation of incentives to cap ture and defend artificially contrived rents and transfers the scope for so cial loss proposed by the theory derives from the relation between the value of a contestable prize and the value of the resources attracted into the con test to determine the beneficiary of the prize underlying this social loss is a specification of how rational behavior by optimizing agents links the value of the prize sought to the resources expended it has been traditional to assume competitive behavior in describing the activities of lobbying and influence seeking then if some further condi tions are satisfied l the total value of the resources expended precisely equals the value of the prize sought so dissipation is complete 2 conse quently the social cost associated with contestability of a rent can be in ferred from the value of the rent itself and the detailed and hard to come by information on individual outlays made in the course of the contest be comes unnecessary by basing their analyses on competitive dissipation contributors to the rent seeking literature see the review by robert tollison 1982 have been able to presume that the observed value of a contested rent is an exact measure of the associated social cost of monopoly power or regu lation similarly in the trade theoretic literature where the rights contested are to quota premia or revenues from trade taxes krueger 1974 bhagwati

free entry and efficient rent seeking this paper concerns rent seeking and the extent to which rents are dissipated under various circumstances gordon tullock s 1967 insight that expenditures made to capture an artificially created transfer represent a social waste suggested that the cost to the economy of monopoly and regulation is greater than the simple harberger 1954 deadweight loss indeed under tullock s original formulation and in the extensions of his work by krueger 1974 and posner 1975 rents are exactly dissipated at the social level 1 is spent to capture 1 so that the total welfare loss from such activities is equal to the harberger triangle plus the rectangle of monopoly profits

aggregate comparative statics abstract in aggregative games each player s payoff depends on her own actions and an aggregate of the actions of all the players many common games in industrial organization political economy public economics and macroeconomics can be cast as aggregative games this paper provides a general and tractable framework for comparative static results in aggregative games we focus on two classes of games 1 aggregative games with strategic substitutes and 2 nice aggregative games where payoff functions are continuous and concave in own strategies we provide simple sufficient conditions under which positive shocks to individual players increase their own actions and have monotone effects on the aggregate the results are illustrated with applications to public good provision contests cournot competition and technology choices in oligopoly

the impact of party alternative on the stock market the case of japan this paper tries to clarify whether change in political regime has an effect on the behaviour of the stock market in japan the empirical study finds that the transition of ruling party effect is not a crucial variable to the nikkei 225 the alienation felt by the japanese about the political environment resulting in a succession of prime ministers does not influence the nikkei 225 stock market behaviour therefore former prime ministers who have resigned have become scapegoats for the poor performance of financial and economic policies

deterrence in contests this paper explores the role of deterrence in contests as a general rule we show that for a deterrence strategy to be played by rational agents it is necessary that the contest be destructive we show for a very general class of functions that pure strategy deterrence equilibria where contestants deter one another do not exist a corollary of this finding is that under fairly general conditions agents should always be expected to engage in contests applied to international relations our results imply that war is always a potential outcome despite deterrence attempts

rent seeking and second best economics in recent years there has been increasing recognition in the economics literature that transfers far from being socially costless may involve intense resource using competition by potential recipients seeking to obtain a favorable share and also similar efforts by potential donors to avoid paying an unfavorable share of these transfers these activities have been traditionally termed as rent seeking though bhagwati 1982 has suggested the alternate name of directly unproductive profit seeking dup that economic rents may generate waste by attracting resources aimed at capturing these rents is by now well established in the economics literature for example the social cost of a monopoly is now recognized to consist not only of the traditional deadweight triangles but also of elements related to and in some cases equal to or exceeding the monopoly profit similarly the welfare costs of quotas or tariffs are now recognized to consist of a distortionary effect and an effect related to rents produced by these quotas or tariffs 1 clearly therefore the recognition of the importance of rent seeking has brought about a need to re evaluate the social costs of various distortions the focus in the rent seeking literature has so far been mainly in this direction and yet another no less important strand of thought which follows logically from the rent seeking literature is one related to socially optimal pricing rules for example if a monopoly s profits are converted into waste such waste is a cost which should figure in evaluating the appropriate pricing rule for other industries output such implications of rent seeking may be as important as the ones described above which are essentially descriptive the optimal pric

rent seeking and entry abstract it is the purpose of this paper to develop a market equilibrium model of rent seeking with entry the model determines the optimal amount of rent seeking activities by individuals the equilibrium number of rent seekers and hence also the total amount of rent seeking in the industry

elections and uk government expenditure cycles in the 1980s an empirical analysis this paper tests whether there exists any significant difference in the responsiveness of uk government expenditure policy to changes in national income and unemployment in pre and post election periods the absence of such a political effect would see the national income and unemployment elasticities for government expenditure being uniform over an election period the empirical analysis deliberately covers the three uk conservative governments between 1979 and 1992 when academic debate on the implications of discretionary policy for the economy and social welfare were particularly prominent and when it appeared that political rhetoric concurred with the academic prescriptions

public sector price controls and electoral cycles public enterprise prices are important policy instruments in developing economies this is why public sector price polices constitute a key element of stabilization programmes implemented in these economies however this significance is not specific to stabilization episodes first this study questions whether an opportunistic politician can manipulate public prices to win elections it analyses the impact of such price controls on budget deficits and the repercussions of alternative financing mechanisms of these deficits on the inflation rate and voters behaviour it is shown that electoral inflation cycles are obtained under domestic debt financing whereas money financing does not permit such a manipulative policy second by focusing on data of the turkish economy for the 1987 1 2003 12 period empirical evidence for such manipulative policies is given

transfer seeking and avoidance on the full social costs of rent seeking we would like to thank gordon tullock and an anonymous referee of this journal for their helpful comments and suggestions this abstract was borrowed from another version of this item

the design of rent seeking competitions in the standard tullock model of rent seeking as a noncooperative game aggregate expenditures by seekers can equal exceed or fall short of total rents depending on what is assumed about the number of seekers and the marginal return to a seeker s investment if the supply of an input into the rent seeking process is controlled by a politician who receives payment from seekers for it the indeterminacy of the process becomes a less serious problem he supplies it and designs the rent seeking game to maximize his wealth the author derives expressions for the number of seekers and the marginal return parameter which maximize the politician s wealth in one input and two input rent seeking processes

contests with multi tasking the standard contest model in which participants compete in a single dimension is well understood and documented multi dimension extensions are possible but are liable to increase the complexity of the contest structure mitigating one of its main advantages simplicity in this paper we propose an extension in which competition ensues in several dimensions and a competitor that wins a certain number of these is awarded a prize the amount of information needed to run the contest is hence limited to the number of dimensions won by each player we look at the design of this contest from the point of view of maximising effort in the contest per dimension and totally and show that there will be a tendency to run small contests with few dimensions the standard tullock model and its results are encompassed by our framework

rent seeking in a market with morality solving a puzzle about corporate social responsibility rent seeking by lobbying for government favors is generally thought to be wasteful in view of this wastefulness it is puzzling that rent seeking by corporations has not been criticized as a failure to be socially responsible or even as an unethical business practice this article examines the compatibility of rent seeking with corporate social responsibility by utilizing thomas dunfee s idea of a marketplace with morality this idea is useful for solving this puzzle because in considering whether rent seeking is compatible with corporate social responsibility it is necessary first to define rent seeking which this article argues is a normative concept and second to find some principled way of identifying rent seeking behavior it also solves the puzzle about rent seeking by revealing that the concept of rent seeking itself is of little use in determining whether certain conduct is or is not socially responsible since rent seeking activity cannot be identified without first evaluating which activity is rent seeking

the industrial structure of the california assembly committee assignments economic interests and campaign contributions this paper examines the provision of campaign contributions made by economic interests to incumbents seeking reelection in the 1984 1986 and 1988 california assembly elections the study tests whether the distribution of campaign contributions by specific industrial sectors corresponds to legislator possession of the policy property rights associated with membership on relevant assembly standing committees a non parametric statistical model compares the distribution of campaign contributions from groups within a given industrial sector to members of relevant policy committees with the distribution of contributions from all other contributor classes the empirical analysis confirms that committee assignments significantly affect the allocation of special interest resources in assembly elections substantiating the importance of institutional considerations in influencing special interest activity

ideological conviction and persuasion in the rent seeking society abstract the paper develops a model of rent seeking in a democratic political context where voting as well as rent seeking matters in this context the paper demonstrates that voter ideology is a constraint on the rent seeking game as well as a possible avenue of rent seeking in a setting where there are both rent seeking and ideological interest groups rent seekers can free ride on the efforts of ideologues which tends to reduce rent seeking effort in a setting where complementary economic and ideological interest groups coordinate their efforts both rent seeking and ideological conflict tend to increase

legal expenditure as a rent seeking game legal expenditures at a civil trial constitute an interesting type of rent seeking contest in civil litigation there is a natural interaction between the objective merits of the case and the outcome of the contest institutions such as fee shifting do not generally have a counterpart in other rent seeking contests the endogenous decision to participate in the rent seeking contest corresponds to the decision by the plaintiff to bring a case and the decision by the defendant to defend it the desirability of fee shifting is very sensitive to the value of the parameter which describes the legal technology

on the social costs of rent seeking versus the social costs of production flexibility in this paper an analysis is provided of two alternative methods of defensive behaviour by a firm first rent seeking and second potential adjustment by way of investing in product flexibility from the analysis it emerges that at times rent seeking may be socially superior less socially wasteful to other more traditional means of responding to threats this paper therefore suggests that in circumstances where some type of defensive or aggressive activity by firms is available rent seeking while constituting gross social waste may be a net social gain given the alternative options available to the firm

monopoly price discrimination and rent seeking this paper considers the effect of rent seeking on the welfare implications of price discrimination by a monopolist it is shown that even when rent seeking fully dissipates monopoly profits it is possible for price discrimination to raise social welfare thus the recognition that monopoly profits attract resource using socially wasteful activities does not necessarily negate price discrimination as a defence of monopoly

nordic exceptionalism social democratic egalitarianism in world historic perspective abstract in what respect if any are the nordic economies exceptionally egalitarian when viewed from a world historical perspective our answer is based on archaeological historical and ethnographic as well as contemporary evidence over the past three thousand years the countries exemplifying the nordic model are not exceptionally equal in the ownership of material wealth moreover the advent of social democracy in the nordic nations did not result in a more equal distribution of years of schooling but intergenerational economic and social mobility appears to be exceptional in the nordic nations and by most measures inequalities in living standards in the nordic economies are less than in other advanced economies the closest nordic analogy in our data set is to the egalitarian distribution of well being and limited intergenerational transmission of wealth found in some horticultural and especially forager economies

collective rent dissipation the theory of rent seeking was initiated by tullock 1967 1980 followed by krueger 1974 and posner 1975 and more recently extended in various directions by allard 1988 appelbaum and katz 1986a b c gradstein and nitzan 1989 hillman and katz 1984 1987 hillman and samet 1987 hillman and riley 1989 katz et al 1990 long and vousden 1987 ursprung 1990 and varian 1989 the purpose of this paper is to extend this theory by introducing the possibility of collective group rent seeking with voluntary individual decisions regarding their extent of participation in the collective rent seeking efforts

rent seeking with regretful agents theory and experiment abstract we investigate both theoretically and experimentally the role that information disclosure has on behavior in all pay environments in which all agents must exert costly effort but only the winner is rewarded through the lens of all pay auctions we show that bidders who have regret concerns when they lose an auction may alter their bids whether or not information about the winning bid is disclosed all losing bidders regret not bidding 0 however when feedback on the winning bid is provided those bidders who lost at an affordable price may regret not bidding more we show that the former effect causes bidders to lower their bids while the latter effect causes bidders to raise their bids our experimental results indicate overbidding whether or not the winning bid is disclosed to losing bidders however disclosing the winning bid leads to even more aggressive bidding increases revenues decreases the frequency of dropouts and also leads to more efficient allocations thus our results show that information disclosure is a powerful tool that mechanism designers may wish to exploit to extract more rents in all pay environments

what s yours is mine rent seeking and the common law the paper develops a rent seeking theory of the common law the general finding is that the law s form depends on thecomparative advantage each group has in production versusappropriation generally and appropriation via litigation inparticular the model generates new interpretations ofdevelopments in united states common law and is used both tosupplement and to criticize two dominant theories of such law the efficiency theory associated with the law and economicsmovement and that generated by critical legal studiesscholars

the dynamics of pretrial negotiation it is shown that many cases proceed to court despite ample opportunity for interaction and much of the settlement takes place on the courthouse steps the deadline effect when fixed costs of bargaining are introduced a u shaped pattern of settlement appears with a greater chance of settlement at the beginning and at the end of negotiations than in the middle these characteristics persist even as the time between offers approaches zero the theoretical predictions are consistent with the stylized facts a large proportion of the lawsuits that are settled out of court are settled very close to the trial date or in the first several days of the trial 3 although the deadline effect appears in many other settings as well it has little theoretical support 4

leaders and followers perspectives on the nordic model and the economics of innovation abstract what kinds of social and economic systems are most conducive to innovation we formulate a simple model in which countries can close the gap with the technological leader but where the cost of doing so may be so high that the country chooses to remain laggards observed disparities in productivity may be the result of a recognition that the cost of closing the gap exceeds benefit and there may therefore exist an international equilibrium in which there are leaders and followers even if it is granted that the united states is the leader and scandinavia are followers there are theoretical grounds for arguing that the nordic model may in fact be better for innovation suggesting that if the us adopted some of the nordic institutions innovations would be higher and societal welfare would be improved even more

on the evolution of prize perceptions in contests abstract we apply an indirect evolutionary approach to players perceived prize valuations in contests evolution in finite populations leads to preferences that overstate the prize s material value and induce overexpenditure we establish an equivalence between evolutionarily stable strategies and the behavior induced by evolutionarily stable preferences

illegal markets and the social costs of rent seeking this paper argues that making goods or services illegal results in an increase in the social costs associated with rent seeking the increased social cost is in the form of negative externalities that result from market participants use of coercion and violence in attempts to control trade in the illegal good consequently the social costs of rent seeking will exceed the value of resources dissipated in rent seeking competition and where the external costs exceed the undissipated portion of the tullock cost the social cost of rent seeking is greater than the sum of tullock and harberger costs

family background and income during the rise of the welfare state brother correlations in income for swedish men born 1932 1968 we investigate if the association between family background and income in sweden has changed for men born between 1932 and 1968 our main finding is that the share of the variance in long run income that is attributable to family background the so called brother correlation in income has fallen by some 17 from 0 49 for the cohorts of brothers born in the early 1930s to below 0 32 for the cohorts born around 1950 from then on the correlations have inched back up to around 0 37 we report suggestive evidence that the decline is driven by changes in education

reexamining efficient rent seeking in laboratory markets given millner and pratt s 1989 finding of behavior inconsistent with theory we reexamine efficient rent seeking in experimental markets we show that a when r 3 no nash equilibrium exists and therefore behavior has no theoretical benchmark to judge consistency and b when r 1 with a new experimental design utilizing an explicit expected payoff matrix rent seeking behavior is consistent with both nash equilibrium and dissipation hypotheses

conflict and rent seeking success functions ratio vs difference models of relative success the rent seeking competitions studied by economists fall within a much broader category of conflict interactions that also includes military combats election campaigns industrial disputes lawsuits and sibling rivalries in the rent seeking literature each party s success pi which can be interpreted either as the probability of victory or as the proportion of the prize won has usually been taken to be a function of the ratio of the respective resource commitments alternatively however pi may instead be a function of the difference between the parties commitments to the contest the contest success function csf for the difference from is a logistic curve in which as is consistent with military experience increasing returns apply up to an inflection point at equal resource commitments a crucial flaw of the traditional ratio model is that neither onesided submission nor two sided peace between the parties can ever occur as a cournot equilibrium in contrast both of these outcomes are entirely consistent with a model in which success is a function of the difference between the parties resource commitments

efficient rent seeking under varying cost structures the rent seeking paradigm which was introduced by tullock 1967 has proven useful for exploring a variety of economic decisions that lie outside the traditional profit maximizing framework early applications of tullock s insight becker 1968 krueger 1974 posner 1975 demsetz 1976 foster 1981 and others usually assumed the entire value of the rent would be dissipated by competition following the fashion of economic profits in competitive markets in 1980 tullock structured a simple game reflecting the decisions made in rent seeking the results generated by his model suggest residual rents may accrue to rent seekers and under certain conditions resist dissipation a number of studies followed tullock s 1980 paper corcoran 1984 corcoran and karels 1985 higgins shugart and tollison 1985 tullock 1984 1985 and 1987 which explore the dissipation of excess rents under various assumptions

monopoly deregulation in the presence of tullock activities we give the condition for a welfare improving monopoly deregulation when the decision making process cannot be insulated from tullock activities and players are risk neutral

decision by sortition a means to reduce rent seeking this essay gives an overview of how arandomized decision mechanism sortition can be expected to reduce the intensity ofself interested activity by rent seekingfactions within democracies the socialcosts of rent seeking are briefly reviewed i then make the case that randomization ofcollective decision making proceduresattenuates rent seeking expenditures iillustrate the argument by reference to thehighly contested presidential election of2000 finally i buttress that argument bycomparing plurality voting and sortitionwithin the context of tullock s efficient rent seeking model 1980

wealth concentration in a developing economy paris and france 1807 1994 using large samples of estate tax returns we construct new series on wealth concentration in paris and france from 1807 to 1994 inequality increased until 1914 because industrial and financial estates grew dramatically then adverse shocks rather than a kuznets type process led to a massive decline in inequality the very high wealth concentration prior to 1914 benefited retired individuals living off capital income rentiers rather than entrepreneurs the very rich were in their seventies and eighties whereas they had been in their fifties a half century earlier and would be so again after world war ii our results shed new light on ongoing debates about wealth inequality and growth

conflict settlement and the shadow of the future abstract we examine a conflictual setting in which adversaries cannot contract on an enforcement variable arms and where the future strategic positions of adversaries are very different when there is open conflict than when there is settlement we show that as the future becomes more important in this setting open conflict becomes more likely than settlement we demonstrate the theoretical robustness of this finding and test it in a laboratory experiment as predicted we find that subjects are more likely to engage in destructive conflict as the future becomes more important

long run equilibrium and total expenditures in rent seeking a comment although corcoran is mathematically correct i believe his comment is not very helpful in order to discuss the matter in some detail the reader should consult table 7 1 from my original efficient rent seeking reproduced on page 92 1 this shows the equilibrium investment of each individual different numbers of individuals playing the game n and differing values of r table 7 2 also reproduced on page 93 shows the total investment

a general analysis of rent seeking games in this paper we reconsider the basic model of efficient rent seeking we stress the importance of the shape of the players reaction curve in order to understand the impact of the technology of rent seeking on the structure of the outcome of the game we give a complete characterization of the pure strategy equilibria moreover the possibility of preemption by a stakelberg leader is discussed according to the nature of the technology of rent seeking available to the agents

does personal background influence a finance minister to cook the books an investigation of creative accounting in swiss cantons abstractthis article aims to identify the factors influencing the use of creative accounting in the public sector its distinctive feature is that it sheds light on creative accounting when used not to hide public deficits but to conceal surpluses it especially explores the impact of the finance minister s fm s background on the phenomenon we take advantage of the quasi experimental settings of the swiss cantons in which the financial management act sets out the possibility of implementing certain accounting gimmicks including mainly additional depreciation charges these charges which are depreciations in name only enable the fm to artificially inflate expenses thus increasing the deficit or reducing the surplus our panel data set of the 26 cantons over the period 1980 2012 includes a new data set of creative accounting and of 116 cantonal fms our results indicate that the fms cook the books irrespective of their personal or ideological background with the exception that trained economists

efficient rents 1 rent seeking behavior in the long run we have analyzed long run behavior in rent seeking under several conditions and behavioral hypotheses the question of interest is whether or not the long run expenditures will exactly equal the value of the rents our results depend on the type of competitive response which is assumed to exist in the long run and on the r value governing the probability of winning

a generalized tullock contest we construct a generalized tullock contest under complete information where contingent upon winning or losing the payoff of a player is a linear function of prizes own effort and the effort of the rival this structure nests a number of existing contests in the literature and can be used to analyze new types of contests we characterize the unique symmetric equilibrium and show that small parameter modifications may lead to substantially different types of contests and hence different equilibrium effort levels

strategic decisions on lawyers compensation in civil disputes i introduction a plaintiff and a defendant usually bargain to settle a civil dispute when they cannot reach a settlement the case goes to trial naturally through the settlement and trial stages the litigants behave strategically a few researchers study such a situation by developing contest models 1 examples include plott 1987 katz 1988 farmer and pecorino 1999 wfirneryd 2000 and hirshleifer and osborne 2001 there exists however some discrepancy between the contest models and the mainstream articles in the law and economics literature the contest models deal with the legal battle itself to use the words of hirshleifer and osborne 2001 by contrast the mainstream articles focus on one or some of the important aspects of the negotiation and litigation process such as the likelihood of settlement the reasons for lawsuits the efficient levels of precautions the burden of proof the comparison of alternative fee shifting systems and the compensation for lawyers in the presence of an agency problem 2 this article attempts to reconcile the two strands a bit further to do so we develop a contest model in which the negotiation and litigation stages are combined as in the previous contest models but unlike the previous ones two lawyers one for a plaintiff and the other for a defendant are introduced using this contest model with delegation we are able to analyze some of the important issues in legal disputes for instance a plaintiffs lawyer in the united states routinely charges one third of the award if his client wins and nothing if his client loses a natural question which we can address using our model is then why the lawyer s contingent fee is not one half of the award nor two thirds but one third using our model we can also address the following issues does the plaintiff have an incentive to choose an hourly fee arrangement if feasible does delegation to the lawyers increase the total legal expenditure of the plaintiff and defendant compared with the case of no delegation why do a plaintiff and a defendant hire lawyers in litigation a straightforward reason for such delegation is that a litigant can benefit by hiring a lawyer who has more capacity than herself throughout the article we use she to refer to a litigant and he to refer to a lawyer another explanation is that a litigant can benefit by achieving strategic commitments through delegation specifically the litigant can change her opponent s behavior in her favor by using a lawyer whose objective function differs from hers baik and kim 1997 consider a contest model that carries both aspects of delegation for the first time in the delegation literature but the idea that strategic delegation benefits a main player has long been emphasized in many contexts examples include schelling 1960 fershtman and judd 1987 katz 1991 and warneryd 2000 this article extends the delegation model of baik and kim 1997 to the case where a plaintiffs lawyer works on a contingent fee basis but a defendant s lawyer on an hourly fee basis 3 we assume that the litigants and lawyers are risk neutral to be more precise our two stage game runs as follows in the first stage knowing that the defendant adopts the hourly fee the plaintiff determines the contingent fee fraction for her lawyer and announces it publicly in the second stage the lawyers exert their effort simultaneously and independently to win the lawsuit the plaintiff s lawyer chooses the effort level on his own but the effort level of the defendant s lawyer is chosen by the defendant the defendant has to incur a monitoring cost because she hires her lawyer under the hourly fee we use logit form probability of winning functions after solving for the subgame perfect equilibrium of the game we first derive the condition on relevant parameters under which delegation to the lawyers brings both litigants more payoffs compared with the case of no delegation

give peace a chance the effect of ownership and asymmetric information on peace abstract we study the possibility of peace when two countries fight a war over the ownership of a resource war is always the outcome of the game played by rational countries under complete or asymmetric information when there is no pre established distribution of the resource among countries when there is such a distribution of the resource under complete information peace is feasible for some initial distributions of the resource whereas under asymmetric information there are two classes of equilibria peaceful equilibria in which peace has a positive probability and aggressive equilibria which assign probability one to war surprisingly a little asymmetric information may yield war

veblen effects political representation and the reduction in working time over the 20th century abstract we explain the substantial decline in work hours over the 20th century by the joint influence of the employees pecuniary emulation of the conspicuous consumption of top income earners and the balance of political power of employers and employees in the presence of conflicts of interest over the issue of working time we present a new labor discipline model incorporating veblen effects in which hours are determined by employers and subject to complete contracts but employee work effort is not we show that while veblen effects increase the hours sought by employees the hours selected by profit maximizing employers may exceed that preferred by employees who may then seek to reduce work hours by means of collective bargaining or governmental intervention we also identify conditions under which employees will prefer longer hours than offered by employers using newly available data on top income shares and on work hours from 10 major industrial economies and covering the entire past century we test two hypotheses that increases in the relative incomes of the very rich are associated with increased hours while increases in the political representation of workers have the opposite effect the estimated effects are large in economic magnitude highly significant and robust to alternative econometric specifications including country and time fixed effects using an alternative data set covering the last third of the past century we show that these results are robust to the inclusion of a measure of taxation and find that decentralized trade union bargaining but not centralized bargaining may raise working hours

rent seeking rent defending and rent dissipation in the preceding analyses of rent defending the posner model yielded welfare losses in excess of the combined areas of the tullock rectangle and the harberger triangle in only one instance furthermore this particular circumstance necessitated voluntary participation in a game with a negative expected value 13 for the tullock rogerson model the explicit addition of rent defenders had no impact on aggregate dissipation

long run equilibrium and total expenditures in rent seeking the lure of excess profits or rents associated with monopoly power gives rise to expenditures to obtain these rents competitive rent seeking behavior is recognized as a factor which must be included among the wastes associated with monopoly power tullock 1967 posner 1975 1 the expenditures are aimed at transferring wealth rather than its creation and the use of resources to obtain this transfer is a loss to society how important rent seeking is as a part of the total monopolistic waste hinges on the size of the total expenditures induced by a given level of excess profits

distribution of surplus in sequential bargaining with endogenous recognition i examine a sequential bargaining situation in which agents contest the right to propose an allocation the contest can either take place at a pre bargaining stage yielding persistent recognition to propose or recur throughout the bargaining yielding transitory recognition equilibrium analysis reveals that surplus is distributed more unequally under persistent recognition social cost is higher under persistent recognition if and only if it attracts a sufficient number of active bargainers and individual s incentive to propose under transitory recognition may actually increase in the number of agents while this incentive always diminishes under persistent recognition

incentive contracts and elections for politicians with multi task problems abstract we consider a model with a politician facing a multi task problem while in office the reelection mechanism distorts the allocation of effort in favor of tasks whose outcomes can be measured more precisely than others we show that a combination of elections and incentive contracts can alleviate this inefficiency the incentive contract does not require direct information about the performance of the politician and is self financing across terms

risk aversion heterogeneity and contests we introduce a novel method of modellingcontests that avoids the complexitiesencountered by the best response function approach we analyse contests in which i there are many risk averse players ii attitudes to risk may differ acrossindividuals and iii the technology thattransforms rent seeking effort intoprobability of winning may also differacross individuals we establish that ifevery player has a constant degree ofabsolute risk aversion a uniqueequilibrium exists we also establishcomparative static results and examine howthe level of rent dissipation is affectedby the heterogeneity of attitudes towardsrisk and the precise nature of the technology

on being asset constrained in litigation contests this paper establishes that being asset constrained may be advantageous for defendants in litigation contests an active asset constraint of defendants i may increase decrease defendant plaintiff contest effort ii may lower the sum of plaintiff and defendant contest effort iii lowers expected defendant payment and iv makes a symmetric contest asymmetric

rentless rent seeking and abnormal returns the assumption that seekers of a monopoly privilege from government will dissipate the expected value of future related rents by costly pursuit of the privilege is frequently used though subject to a growing debate tullock has described a set of plausible circumstances where strategic bidding for a single prize leads to net gains for the rent seeking participants 2 that is even with competition for rents less than full dissipation of future gains may obtain tullock also identifies other circumstances where the process is a zeroor negative sum game if the theory of rentless rent seeking holds under any set of circumstances empirical work designed to identify wealth effects associated with a regulatory event is destined to fail indeed such empirical analysis may find no effect when in fact a regulatory restriction has occurred yet reports of empirical research on regulatory effects have supported the hypothesis that rents have been generated 3 do such empirical results implicitly support tullock s theory of efficient rent seeking are such results purely random observations of one of many discrete regulatory processes involving the same firms where the overall expected value is zero 4 or is there an explanation of such results that is consistent with full dissipation of rents and systematic observation of abnormal positive returns for shareholders of directly affected firms this article offers another explanation for observing profitable rent seeking that is compatible with tullock s observations and rent dissipation theory the next section gives the explanation that section is followed by a brief summary

contest efforts in light of behavioural considerations this study shows that distortion of probabilities is a possible reason for rent under dissipation incontests with relatively small number of participants such distortion may also result however inover dissipation of the contested rent focusing on contests with homogeneous contestants and thecommonly studied contest success function our main results clarify under what circumstances i rents are more under dissipated relative to the standard situation where probabilities are notdistorted ii rents are under dissipated yet less intensely relative to the standard situation whereprobabilities are not distorted iii rents are over dissipated and iv the contest does not possess asymmetric interior equilibrium in pure strategies

the political economy of the german lander deficits weak governments meet strong finance ministers we analyse the deficits of the german lander regional states for the period 1960 to 2005 and test a number of hypotheses derived from the literature on the political economy of public deficits we find evidence for the weak government hypothesis that is coalition governments issue significantly more debt than single party governments a result that is typically explained by the common pool problem as our data suggest this result crucially hinges on the position or strength of the finance minister within coalition governments we find that coalition governments with a strong finance minister are in terms of borrowing not significantly different from single party governments in addition we find weak evidence for an opportunistic political business cycle as borrowing is significantly lower in pre election years it appears that german voters favour fiscal discipline there is no evidence for partisan behaviour so party ideology seems to play a negligible role

lottery versus all pay auction models of lobbying i first provide a complete characterization of the unique equilibrium of the lottery game by n lobbyists with asymmetric valuations and then compare the lottery and the all pay auction models of lobbying i show that the exclusion principle discovered by baye kovenock and de vries 1993 for all pay auction does not apply to lottery i also show that the perverse effect that an exogenous cap may increase the total lobbying expenditure in a two bidder all pay auction discovered by che and gale 1998 does not apply to lottery

the incidence of overdissipation in rent seeking contests tullock s analysis of rent seeking and overdissipation is reconsidered we show that while equilibrium strategies do not permit overdissipation in expectation for particular realizations of players mixed strategies the total amount spent competing for rents can exceed the value of the prize we also show that the cross sectional incidence of overdissipation in the perfectly discriminating contest ranges from 0 50 to 0 44 as the number of players increases from two to infinity thus even though the original analysis of overdissipation is flawed there are instances in which rent seekers spend more than the prize is worth

ambiguous political power and contest efforts when there is incomplete information on the source of power in a contest the contestants may divide their lobbying efforts between the potential centers of power only one of which determines the contests winning probabilities our analysis focuses on the effect of ambiguity regarding the source of power on the contestants aggregate effort in a symmetric simple lottery contest with two potential centers of power specifically we examine the effects of varying the informativeness of the contestants private signals i e the probability that a signal is correct and the degree of correlation between them our benchmark case is the standard tullock s model in which the source of power is known i e the contestants signals are perfectly informative we show that the level of aggregate effort in this case is reached also when the signals are perfectly uninformative however in any intermediate case the contestants aggregate effort is lower provided that the signals are not perfectly correlated in other words there is a u shape relationship between the informativeness of the signals and the aggregate effort in the contest the lowest level of effort is spent when the signals are independent and the probability that a signal is true is about 0 85 in this case efforts are reduced by about one fifth in comparison with the benchmark case from a rent dissipation of 50 to slightly over 40

contingent fees meet the british rule an exploratory study compensation schemes in which lawyer s fees are contingent on winning the suit are becoming increasingly popular throughout europe at the same time the british rule of legal cost allocation is applicable in many european countries as a result it is of policy relevance how their coexistence may be harmonized this paper uses the litigation contest framework to analyze the consequences of three different cost allocation regimes if a plaintiff s attorney is compensated on a contingent fee basis we compare the equilibrium contest effort justice and payoffs for affected parties in the different regimes and find arguments in favor of not reimbursing contingent fees

rent seeking behaviour of retaliating agents this paper has examined a rent seeking game where the players take a more sophisticated approach to evaluating the potential strategies and counter strategies of their rivals than in the standard nash case we have derived the conditions for the existence of symmetric and nonsymmetric equilibria for the game and derived the properties of these equilibria three results merit repeating first we find that rent dissipation will not in general be complete second and in contrast to much of the traditional literature we find that the socially optimal result of zero rent seeking is sometimes a feasible equilibrium outcome for our game finally there exist rent seeking configurations in which the best play of one of the rivals is to withdraw from the game or alternatively stated where it is not optimal for a rival to contest the rent by entering the game in these nonsymmetric cases it would appear that tullock s conjecture about the value of preemptive moves remains valid this is true even when the strategies and counter strategies available to the players are much more complex than in the traditional nash approach

intergenerational top income mobility in sweden capitalist dynasties in the land of equal opportunity this paper presents new evidence on intergenerational mobility at the top of the income and earnings distributions using a large dataset of matched father son pairs in sweden we find that intergenerational transmission is very strong at the top more so for income than for earnings at the extreme top top 0 1 income transmission is remarkable with an intergenerational elasticity of approximately 0 9 we also study potential transmission mechanisms and find that iq non cognitive skills and education of the sons are all unlikely channels in explaining the strong transmission within the top percentile increases in the income of the fathers if they are related at all are negatively associated with these variables wealth on the other hand has a significantly positive association our results suggest that sweden known for having relatively high intergenerational mobility in general is a society in which transmission remains strong at the very top of the distribution and wealth is the most likely channel

cultural institutions and value formation on the art market a rent seeking approach the formation of value in the artistic market can be specifically affected by the behavior of cultural institutions acting on it as monopolistic quality certifiers the rent maximizing strategy limits quantities to sub optimum levels and keeps prices and costs higher this can be worsened by institutional rent seeking the establishment s strategies cannot always be matched through public policies because this can result in an increase of monopoly social losses and of the establishment s lobbying efforts

efficient rents 2 free entry and efficient rent seeking in the competition for a monopoly right in which the number of bidders is fixed tullock and others have found the value of the resources spent in the aggregate to capture the transfer to be sometimes less than and sometimes greater than the value of the monopoly we think this approach to be incomplete since it leaves unanswered the question of what determines the number of individuals who will vie for the right to be the monopolist it is unsatisfactory to imagine for example that the franchisor sets the number of contestants one could then foresee that rent seeking would arise to influence the permissible number of bidders and this merely moves the rent seeking dissipation question one step back