Shmuel Nitzan

Modelling rent-seeking contests

This survey focuses on alternative ways of modelling rent-seeking contests. My primary concern is with the relationship between the extent of rent dissipation and the underlying contest characteristics: e.g., the number of players, their attitudes toward risk, the asymmetry among the players, the source of the rent, the nature of the rent or the nature of the rent setter. The survey concludes with a brief description of attempts to endogenize various components of the rent-seeking contest.

Collective Rent Dissipation

This paper generalizes the widely studied individual rent-seeking model by introducing the possibility of collective rent seeking; n interest groups compete over a fixed rent and individual group members decide voluntarily on the extent of participation in their group rent-seeking activities. The analysis focuses on the possible advantage of free riding in reducing the extent of rent dissipation. The main result establishes the relationship between the extent of rent dissipation and the number and size of the competing groups, the initial wealth and attitude toward risk of the individual players, and the rules applied by the groups to distribute the rent among their members. Copyright 1991 by Royal Economic Society.

Rent-Seeking for Pure Public Goods

In this paper we present a formal analysis of rent-seeking for public goods by two or more groups with different numbers of individuals. We begin by considering equally wealthy groups under risk neutrality, a case which constitutes our basic model. Several surprising and interesting results emerge from the analysis of this basic case. The problem is then extended to deal with (a) groups with different wealth levels, and (b) risk aversion. This last extension brings about a further crop of interesting and useful results.

The Optimal Decision Rule for Fixed-Size Committees in Dichotomous Choice Situations: The General Result

This paper presents a general pairwise choice framework and derives the optimal decision rule for fixed-size committees. The main result generalizes a number of earlier results in the subject. Copyright 1997 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Optimum Contracts for Research Personnel, Research Employment, and the Establishment of "Rival" Enterprises

This paper considers the problem of hiring scientists for research and development projects when one takes explicit account of the fact that the scientist may be able to use the information acquired during the project in a rival enterprise. Managements problem is to determine an optimum labor policy for its project. The policy consists of an employment decision and a labor contract. Given optimum behavior, it is straightforward to analyze the effect of the potential for mobility of scientific personnel on project profitability and on research employment. We also formalize conditions under which one would expect to observe a scientist leaving his employer to set up or join a rival.

Rent-Seeking with Non-identical Sharing Rules

The primary object of this paper is to examine the role of differential sharing rules within a collective rent-seeking setting on the possible non-existence of Nash equilibrium. Focusing on groups that distribute part of the rent equally among their members and the residual according to relative effort, we show that in rent-seeking societies applying the two polar sharing rules equilibrium never exists. In the general case where groups apply different but not necessarily the polar sharing rules, we study the relationship between group variability in distributing rents and the problem of non-existence of equilibrium in the rent-seeking game.

Collective decision making : an economic outlook

This book provides an economic approach to the study of collective decision making. In Social Choice theory, the main problem of collective decision making is normally conceived of as one of aggregating diverse individual preferences. However, in practice, objectives are often common to the individuals - whether, for instance, in the firm, or where a medical diagnosis is required - but the information available to each individual, and their ability to utilise that information optimally, differ. The authors therefore deal with a different problem of decisional skills aggregation assuming homogeneous preferences but differing decisional skills, and develop a framework for the study of collective decision making. They examine the effect of the size of the decision making body; incomplete information on decisional skills; interdependence among decisions; shadow prices of decision rules; and of decision making costs and benefits on optimal group decision making. The model is then illustrated in a range of different fields, including industrial organisation, labour economics and in the design of consulting schemes, medical diagnostic systems, and corporate law.

The vulnerability of point-voting schemes to preference variation and strategic manipulation

AbstractThis essay measures and analyzes for a special class of point-voting schemes (the Borda method, plurality rule and the unrestricted point-voting scheme) sensitivity to preference variation (a simple change in the socially winning alternative resulting from alteration of a single voters preferences) and vulnerability to individual strategic manipulation (a change in the winning alternative that benefits the voter whose preferences are altered). Assuming that society (n voters with linear preference orders on a finite set of m alternatives) satisfies the impartial-culture assumption, that is, each randomly selected voter is equally likely to hold any one of the randomly picked possible preference orders on the alternatives, we demonstrate: (i)for a given rule and a fixed number of voters, the sensitivity to individual preference variation and the vulnerability to individual strategic manipulation are greater, the larger the total number of alternatives.(ii)For a given rule and a fixed number of alternatives, the vulnerability to individual strategic manipulation, in general, is not greater the smaller the total number of voters. Such a relationship does hold, however, if n is sufficiently large.(iii)For any given combination of number of voters and number of alternatives, the unrestricted point-voting scheme is more sensitive to preference variation than the Borda method, which, in turn, is more exposed to such variation relative to the plurality rule. A similar conclusion does not hold with respect to vulnerability to individual strategic manipulation, unless the number of voters is sufficiently small.

Private provision of a discrete public good with uncertain cost

Abstract It is known that a discrete public good is efficiently provided in the subset of ‘undominated equilibria’ (those not Pareto dominated within the set of Nash equilibria). We make the cost of the discrete public good uncertain at the time the contribution game is played. This can lead to strikingly different results. Often, the public good is underprovided in any Nash equilibrium and there is a unique undominated equilibrium. These results hold for some distributions when there is arbitrarily little uncertainty and always when there is enough uncertainty.

Median-based extensions of an ordering over a set to the power set: An axiomatic characterization

Abstract In this paper we consider the problem of inducing an ordering over the set of all non-empty subsets of a finite set X of alternatives, given an ordering R over X . Assuming R to be antisymmetric and X to have at least six elements, we provide a set of independent, necessary, and sufficient conditions for the induced ordering to be “median-based” (so that every non-empty subset of X is “indifferent” to its own median set defined in terms of R ).