Reexamining efficient rent-seeking in laboratory markets

Given Millner and Pratt's (1989) finding of behavior inconsistent with theory, we reexamine efficient rent-seeking in experimental markets. We show that (a) when r = 3, no Nash equilibrium exists and therefore behavior has no theoretical benchmark to judge consistency, and (b) when r = 1, with a new experimental design utilizing an explicit expected payoff matrix, rent-seeking behavior is consistent with both Nash equilibrium and dissipation hypotheses.The authors gratefully acknowledge the financial support of The John A. Walker College of Business, Appalachian State University. Cliff Nowell provided generous advice. John Willingham supplied valuable research assistance. Michael Pratt and Gordon Tullock provided helpful comments on an earlier version of the paper.