Title
Policy Making And Rent-Dissipation: An Experimental Test
Keywords
Experimental economics; Rent-dissipation; Rent-seeking; Transfers
Abstract
We present a transfer-seeking model of political economy that links the theory of Becker (1983) with Tullock-type models of politically contestable rents. In our model the size of the transfer is determined endogenously, and over-dissipation of rents is predicted even under conditions of risk-neutrality and perfect rationality. We implement an empirical test of this model by collecting behavioral data in a laboratory experiment. We confirm the existence of behavior that leads to over-dissipation of rents in games with both symmetric and asymmetric political power. To the extent that the transfer-seeking costs are social costs, our findings imply that the total costs of running government might be greatly underestimated if the value of the rent is used as a proxy for the rent-seeking cost. We also confirm the hypotheses that lowering the political power of one player can lead to smaller rent-seeking expenditures and to larger transfers. © Economic Science Association 2007.
Publication Date
3-1-2007
Publication Title
Experimental Economics
Volume
10
Issue
1
Number of Pages
21-36
Document Type
Article
Personal Identifier
scopus
DOI Link
https://doi.org/10.1007/s10683-006-9133-1
Copyright Status
Unknown
Socpus ID
34248340112 (Scopus)
Source API URL
https://api.elsevier.com/content/abstract/scopus_id/34248340112
STARS Citation
Bullock, David S. and Rutström, E. Elisabet, "Policy Making And Rent-Dissipation: An Experimental Test" (2007). Scopus Export 2000s. 6864.
https://stars.library.ucf.edu/scopus2000/6864