Article

Delegation with multiple instruments in a rent-seeking contest

Public Choice (Impact Factor: 0.91). 01/2007; 131(3):453-464. DOI: 10.1007/s11127-006-9125-x
Source: RePEc

ABSTRACT We consider delegation in a rent-seeking contest with two players, where delegates have more instruments at their disposal than the main players. We endogenize both the decision to hire a delegate and the contingent fee offered to the delegates. We characterize the situations when either no, one or two players hire a delegate in equilibrium. We show that the decision to hire a delegate depends in a non-monotonic way on the size of the contested prize. Copyright Springer Science+Business Media, LLC 2007

0 Bookmarks
 · 
58 Views
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: We consider two-player contests in which each player hires a delegate who expends his effort to win a prize on the player's behalf. Endogenizing delegation contracts, we focus on the equilibrium contracts between the players and their delegates. We first show that each player's equilibrium contract is a no-win–no-pay contract. Then, we examine the delegates' equilibrium compensation spreads, effort levels, probabilities of winning, expected payoffs, and the players' equilibrium expected payoffs. We show that economic rents for the delegates may exist.
    Southern Economic Journal 01/2007; 73(4):986-1002. · 0.63 Impact Factor
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: This paper reviews the literature on commercial sport through the lens of the economic theory of contests/tournaments. It seeks to draw together research on incentives in individualistic sports such as golf and footraces with the research on uncertainty of outcome and competitive balance in team sports such as baseball and soccer. The contest framework is used to analyze issues such as the optimal distribution of prizes, the impact of revenue sharing, salary caps, draft rules, and a variety of other restraints commonly employed in sports leagues. The paper draws heavily on a comparative analysis of contest organization, in particular between North America and Europe.
    Journal of Economic Literature 02/2003; 41(4):1137-1187. · 9.24 Impact Factor
  • [Show abstract] [Hide abstract]
    ABSTRACT: This is a model of a contest where, in order to win, each opponent can use two instruments. The probabilities of winning are explored, as well as the expenditures of the interest groups, and the relative rent-dissipation in both cases where the players have the option to use only one instrument (the standard Tullock contest) and where the players have the option to use two instruments in the contest. We show that the use of two instruments strengthens the player with the higher stake, decreases the relative rent dissipation and it decreases total expenditure if the parties are sufficiently asymmetric. Copyright Springer-Verlag Berlin Heidelberg 2003
    Economics of Governance 02/2003; 4(1):81-89.

Full-text (2 Sources)

View
0 Downloads
Available from
Sep 18, 2014