Inuencing rent-seeking contests

This paper shows that a policy that uniformly increases contestants’ e¤ort costs can lead to an increase in total e¤ort. In asymmetric settings, this “levels the playing …eld”and therefore encourages weaker players (who otherwise would have stayed out) to enter. Paradoxically, a contest designer whose only objective is to maximize total e¤ort may thus wish to make rent-seeking “more di¢ cult.” These results suggest that the often-lamented bureaucratic red tape might in fact be a rational response to the problem of attracting lobbyists to participate in a contest. Keywords: Asymmetric contests, contest design, e¤ort costs, entry decisions, red tape JEL classi…cations: C72, D72, D73 My thanks are due to Alberto Behar, Eric Budish, Ian Jewitt, Kohei Kawamura, Iain McLean and Meg Meyer for helpful discussions and advice. Financial support from the ESRC is gratefully acknowledged.