Dynamic contests
In: Discussion papers SP II 2010-10
In: Forschungsprofessur & Projekt "The Future of Fiscal Federalism"
Considering several main types of dynamic contests (the race, the tug-of-war, elimination contests and iterated incumbency fights) we identify a common pattern: the discouragement effect. This effect explains why the sum of rentseeking efforts often falls considerably short of the prize that is at stake. It may cause violent conflict in early rounds, but may also lead to long periods of peaceful interaction.