Suchergebnisse

This paper considers a common n-agent symmetric rent-seeking game. It derives conditions so that risk-aversion and risk always decrease rent-seeking efforts. These conditions hold for any regular contest success function when risk-averse rent-seekers are also prudent. Under n=2, prudence is a necessary and sufficient condition for risk-aversion to decrease rent-seeking efforts compared to risk-neutrality. An intuition for this result is given based on a self-protection model. Adapted from the source document.

National audience ; Governments sometimes encourage or impose individual self-protectionmeasures, such as wearing a protective mask in public during an epidemic. However, by reducing the risk of being infected by others, moreself-protection may lead each individual to go outside the house moreoften. In the absence of lockdown, this creates a "collective offsettingeffect", since more people outside means that the risk of infection isincreased for all. However, wearing masks also creates a positive externality on others, by reducing the risk of infecting them. We showhow to integrate these different effects in a simple model, and we discuss when self-protection efforts should be encouraged (or deterred)by a social planner.