An Experimental Analysis of Rent Seeking Under Varying Competitive Conditions

We test several predictions of Gradstein's(1995) rent seeking model using anexperimental design that includes avariable number of participants, costheterogeneity, and an entry fee. Consistentwith theoretical predictions, costheterogeneity and the entry fee decreasethe number of participants. Overall,participation is much lower than predicted. Also consistent with Gradstein's model, wefind that rent seeking expendituresincrease with the number of competitors anddecrease with the addition of an entry fee. Experimental results do not support theprediction that cost heterogeneitygenerally decreases expenditures in rentseeking contests.