Infinitely repeated contests: How strategic interaction affects the efficiency of governance

Authors

  • Sherrill Shaffer,

    Corresponding author
    1. Department of Economics and Finance, University of Wyoming, Laramie, WY, USA
      Sherrill Shaffer, Department of Economics and Finance, University of Wyoming, 1000 East University Avenue, Laramie, WY 82071, USA. Email: shaffer@uwyo.edu, JRamses@uwyo.edu
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  • Jason Shogren

    1. Department of Economics and Finance, University of Wyoming, Laramie, WY, USA
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Sherrill Shaffer, Department of Economics and Finance, University of Wyoming, 1000 East University Avenue, Laramie, WY 82071, USA. Email: shaffer@uwyo.edu, JRamses@uwyo.edu

Abstract

Contests over the scope and strength of regulation and governance are commonplace – and commonly repeated. The same players vie for the same government prize year after year: for example, environmental standards, government contracts, research grants, and public good provision. The open question is whether more rents are dissipated in repeated regulatory contests than onetime competitions. This question matters for regulation and governance because societies should design policies to waste the fewest scarce resources. According to some, the answer is “no”, but others say “yes”– more resources are wasted when people compete repeatedly for the same government prize. Herein, we use two game theoretic equilibrium concepts to help untangle the answer. Our results suggest non-myopic contestants are more likely to behave as partners than rivals – provided the context is relatively sterile. Several common complications help break up the tacit partnership, including a disparity in relative ability, a shrinking prize, and additional players.

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