Journal
GAMES AND ECONOMIC BEHAVIOR
Volume 41, Issue 2, Pages 344-364Publisher
ACADEMIC PRESS INC ELSEVIER SCIENCE
DOI: 10.1016/S0899-8256(02)00503-1
Keywords
preference evolution; risk attitudes; contests; winner-take-all markets
Categories
Ask authors/readers for more resources
We study the evolution of an economy where agents who are heterogeneous with respect to risk attitudes can either earn a certain income or enter a risky rent-seeking contest. We assume that agents behave rationally given their preferences, but that the population distribution of preferences evolves over time in response to material payoffs. We show that, in particular, initial distributions with full support converge to stationary states where all types are still present. Although rents are perfectly dissipated in material terms at a steady state, efficiency is greater than if everybody had been risk neutral, since risk lovers specialize in rent seeking. (C) 2002 Elsevier Science (USA). All rights reserved.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available