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Risk Aversion, Heterogeneity and Contests

Cornes, Richard; Hartley, Roger

Description

We introduce a novel method of modelling contests that avoids the complexities encountered by the 'best response function' approach. We analyse contests in which (i) there are many risk averse players, (ii) attitudes to risk may differ across individuals, and (iii) the technology that transforms rent-seeking effort into probability of winning may also differ across individuals. We establish that, if every player has a constant degree of absolute risk aversion, a unique equilibrium exists. We...[Show more]

CollectionsANU Research Publications
Date published: 2003
Type: Journal article
URI: http://hdl.handle.net/1885/33093
Source: Public Choice
DOI: 10.1023/A:1026136008608

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