Scandinavian Working Papers in Economics
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The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Economics and Finance

No 77:
Rent, Risk and Replication. Political Contests and Preference Adaptation

Karl Wärneryd ()

Abstract: We study the long-run behavior of an economy where agents who are heterogeneous with respect to risk attitudes can either earn a certain income or enter a risky rent seeking contest. In contrast with standard evolutionary game theory, we distinguish between utility and material payoffs, and allow the population distribution of preferences to evolve over time in response to material payoffs. We show that, in particular, initial distributions with full support converge to stationary states where all types may still be present, risk lovers specialize in rent seeking, and the available rents are perfectly dissipated.

Keywords: Risk attitudes; rent seeking; evolution; (follow links to similar papers)

JEL-Codes: C72; D72; D80; (follow links to similar papers)

27 pages, October 1995

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This paper is published as:
Wärneryd, Karl, (2002), 'Rent, Risk and Replication. Preference Adaptation in Winner-take-all Markets', Games and Economic Behavior, Vol. 41, pages 344-364

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