The thrill of victory,the agony of defeat

This paper presents experimental evidence from a rent-seeking exercise where the highest bidder wins the rent, but all bidders, including the winner, lose their wagers. This exercise closely resembles the rent-seeking dilemma facing agents in many settings. There are two main conclusions from the results. First, there is a tendency towards overdissipation of the rent. Second, some individuals are willing to pay more for a rent than its face-value would warrant. We attribute this phenomenon to a “thrill of victory” effect.