Article

The Power of Money: Wealth Effects in Contest

Fred Schroyen et Nicolas Treich

Résumé

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.

Mots-clés

Conflict; contest; rent-seeking; wealth; risk aversion; lobbying; power; redistribution;

Codes JEL

  • C72: Noncooperative Games
  • D72: Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior

Remplace

Fred Schroyen et Nicolas Treich, « The Power of Money: Wealth Effects in Contest », TSE Working Paper, n° 16-699, septembre 2016.

Référence

Fred Schroyen et Nicolas Treich, « The Power of Money: Wealth Effects in Contest », Games and Economic Behavior, vol. 100, novembre 2016, p. 46–48.

Publié dans

Games and Economic Behavior, vol. 100, novembre 2016, p. 46–48