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.
Keywords
Conflict; contest; rent-seeking; wealth; risk aversion; lobbying; power; redistribution;
JEL codes
- C72: Noncooperative Games
- D72: Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
Replaced by
Fred Schroyen, and Nicolas Treich, “The Power of Money: Wealth Effects in Contest”, Games and Economic Behavior, vol. 100, November 2016, pp. 46–48.
Reference
Fred Schroyen, and Nicolas Treich, “The Power of Money: Wealth Effects in Contest”, TSE Working Paper, n. 16-699, September 2016.
See also
Published in
TSE Working Paper, n. 16-699, September 2016