The Power of Money: Wealth Effects in Contest

Schroyen, Fred and Treich, Nicolas (2016) The Power of Money: Wealth Effects in Contest. Games and Economic Behavior, 100. pp. 46-48.

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Official URL: http://tse-fr.eu/pub/30894

Abstract

The relationship between wealth and power has long been debated. Nevertheless, this relationship has been rarely studied in a strategic game. In this paper, we study wealth effects in a strategic contest game. Two opposing effects arise: wealth reduces the marginal cost of effort but it also reduces the marginal benefit of winning the contest. We consider three types of contests which vary depending on whether rents and efforts are commensurable with wealth. Our theoretical analysis shows that the effects of wealth are strongly "contestdependent". It thus does not support general claims that the rich lobby more or that low economic growth and wealth inequality spur conflicts.

Item Type: Article
Language: English
Date: November 2016
Refereed: Yes
Uncontrolled Keywords: Conflict, contest, rent-seeking, wealth, risk aversion, lobbying, power, redistribution
JEL codes: C72 - Noncooperative Games
D72 - Economic Models of Political Processes - Rent-Seeking, Elections, Legislatures, and Voting Behavior
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 22 Sep 2016 09:13
Last Modified: 07 Mar 2018 13:23
OAI ID: oai:tse-fr.eu:30894
URI: http://publications.ut-capitole.fr/id/eprint/22382

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