Derek J. Clark

A multi-winner nested rent-seeking contest*

This paper considers a symmetric imperfectly discriminating rent-seeking contest in which there may be several winners. We first demonstrate a serious flaw in previous work and then go on to suggest an alternative method for analyzing the contest. In contrast to the previous work, we show that the value of the rent is fully dissipated in equilibrium as the number of players becomes large.

Allocation efficiency in a competitive bribery game

We consider the selection properties of a competitive bribery model in the presence of two types of asymmetry: unevenness between the competitors and unfairness in the contest rules. Only under very special conditions does the benchmark model yield allocation efficiency; in other cases, the effect on allocation efficiency of making the contest more unfair is ambiguous and parameter specific. We present conditions under which each result obtains. Our results indicate that it is socially optimal to run an unfair contest in order to redress the allocation inefficiency introduced when contestants are asymmetric. We show, however, that a selfish, income-maximizing bribee will discriminate in the opposite direction to that which society would prefer.

Asymmetric conflict: weakest link against best shot

The authors study conflict on multiple fronts. A defending player needs to successfully defend all fronts, and an attacker needs to win at only one. Multiple fronts result in a considerable disadvantage for the defending player, and even if there is a defense advantage at each of them, the payoff of the defending player is zero if the number of fronts is large. With some positive probability, in the equilibrium defending players surrender without expending effort.

Influence and the discretionary allocation of several prizes

Abstract When a decision process involves discretion, it may also be open to influence by various actors. If a single prize is at issue, then this influence can be modelled in the context of a rent-seeking game. However, the basic rent-seeking model needs to be extended in order to examine the amount of influence exerted when more than one prize is at stake. In this paper, we investigate the effect of several factors which may affect rent-seeking in this multi-prize framework but are not accounted for in single-prize models; examples here are the number of prizes, the division of the prize mass and the distribution mechanism which is employed.

Rank-order tournaments and selection

Rank-order tournaments are often presented as devices for aligning incentives in a principal-agent setting. In most of this literature agents are expected to be identical so that the principal is indifferent ex ante as to who wins the contest, implying that the selection properties of the tournament can be ignored. In this paper we consider a tournament which is not necessarily symmetric, and in which agent type is private information. The principal cares about who wins, but the basic tournament will not achieve perfect selection; the lower-type agent may sometimes win. In a two-player tournament we present a simple reward system in which the winners reward depends upon which (if any) of two “test standards” is passed; conditions are presented under which this system allows the principal to choose the best agent. This system can be extended in a simple manner to rank types in ann-player tournament. We suggest that the theory can be applied to internal labor markets and research contests.

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 maximizing 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.

Priority setting in health care: An axiomatic bargaining approach

This paper examines how axiomatic bargaining theory can be used to analyze different rules for dividing the health care budget between two patients. This approach allows an explicit statement of the assumptions underlying the division rules and also provides a general characterization of the consequences of using these rules when the opportunity set (or number of patients) changes.

Agency in health care with an endogenous budget constraint.

In this paper a doctor acts as a perfect agent for a group of patients in an environment where the health service is funded by a group of contributors. The contributor group donates resources to the health sector in accordance with its split preferences about the health care services which they would like for themselves and those which they would like for others. We show that the size of the health budget is endogenous and depends on the choices made by the doctor. The focus is on the division of the budget between health enhancing and non-health enhancing health care.

Endogenous Technology Sharing in R&D Intensive Industries

This paper analyses the endogenous formation of technology sharing coalitions with asymmetric firms. Coalition partners produce complementary technology advancements, although each firm determines its R&D investment level non-cooperatively and there is no co-operation in the product market. We show that the equilibrium coalition outcome is either one between the two most efficient firms, or a coalition with all three firms. The two-firm coalition is the preferred outcome of a welfare maximising authority if ex ante marginal cost is sufficiently high, and the three-firm coalition is preferred otherwise. Furthermore, we show that the equilibrium outcomes result in the lowest total R&D investment of all possible outcomes. Aircraft engine manufacturing provides a case study, and indicates the importance of anti-trust issues as an addition to the theory.

How Unpleasant a Result?: A Comment on Amegashie

Conventional wisdom in the rent-seeking literature says that total rentseeking expenditures increase in the number of participants. In a recent paper in this journal, Amegashie (1999) uncovers a result which stands in stark contrast to this. In a version of the Tullock rent-seeking contest, it is shown that total rent-seeking can actually be reduced by adding extra participants. My critique of the model used is twofold. First, I question the amount of rent-seeking which actually takes place in the Amegashie model, and how this varies with the number of participants. Second, I believe that there are grounds to suspect that the prize in the rent-seeking contest is based upon an incredible promise by the rent-setter.