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This paper considers a common n-agent symmetric rent-seeking game. It derives conditions so that risk-aversion and risk always decrease rent-seeking efforts. These conditions hold for any regular contest success function when risk-averse rent-seekers are also prudent. Under n = 2, prudence is a necessary and sufficient condition for risk-aversion to(More)
We explore the effect of the timing of the resolution of income uncertainty on consumption. An agent faces uncertainty about his income at date t + 2. What is the effect of being informed that the uncertainty will be resolved at date t + 1 on the consumption at date t? We show that the effect is positive if and only if marginal utility is convex (prudence),(More)
This paper offers interpretative properties of the " fear of ruin " coefficient u/u 0 (Aumann and Kurz, 1977, Econometrica). This coefficient controls the behavior of expected utility maximizers towards the risk of losing their entire wealth. It is shown that this coefficient also captures risk-aversion motives in first-price auctions model. Equivalent(More)
We present how uncertainty and learning are classically studied in economic models. Specifically, we study a standard expected utility model with two sequential decisions, and consider two particular cases of this model to illustrate how uncertainty and learning may affect climate policy. While uncertainty has generally a negative effect on welfare,(More)
This article illustrates how the joint elicitation of subjective probabilities and preferences may help understand behavior in games. We conduct an experiment to test whether biased probabilistic beliefs may explain overbidding in first-price auctions. The experimental outcomes indicate that subjects underestimate their probability of winning the auction,(More)
CIRANO Le CIRANO est un organisme sans but lucratif constitué en vertu de la Loi des compagnies du Québec. Le financement de son infrastructure et de ses activités de recherche provient des cotisations de ses organisations-membres, d'une subvention d'infrastructure du Ministère du Développement économique et régional et de la Recherche, de même que des(More)