ECON1001 Lecture Notes - Lecture 5: Rent-Seeking, Dictator Game, Unearned Income
27 Jun 2019
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Document Summary
Covered: (1) rents; (2) game theory, chicken game, prisoners dilemma, fta, the dictator game. A rent can be seen as: unearned income eg: bidding for contract or government monopoly which gives the monopoly a regulatory advantage and monopolicy rights over an oasis (monopoly rents). Rent seeking: is the act of capturing rents in the above form. Eg: spending time, money, effort to capture a set of existing resources by expending your own resources. It is unproductive which reflects the design or format in which rent seeking is sought eg: to obtain a cleaning contract multiple firms bids for the contract expending a third of the value of the asset. If all firms are just as good as the other, the contract could be just given to one of them without the bidding processes. This would save a lot of time and money.
