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What did Posner (1975) describe in his rent-seeking contest model?
What did Posner (1975) describe in his rent-seeking contest model?
- A scenario where bidders had to pay a fixed fee to enter a contest with no chance of winning
- A bidding war where all participants were guaranteed to win regardless of investment
- A constant-cost game where the probability of winning was proportional to investment (correct)
- A variable-cost game where the probability of winning was inversely proportional to investment
In the context of rent seeking, what did Posner assume about the bidders in his model?
In the context of rent seeking, what did Posner assume about the bidders in his model?
- They were risk-seeking
- They were risk-neutral (correct)
- They were risk-averse
- Their risk preference was not considered in the model
What is a key characteristic of rent-seeking costs according to the text?
What is a key characteristic of rent-seeking costs according to the text?
- Rent-seeking costs are solely caused by government interventions
- Rent-seeking costs always result in increased output and utility
- Rent-seeking costs are negligible and do not impact economic outcomes
- Rent-seeking costs generally do not arise in private, competitive processes (correct)
In the context of rent-seeking contests, what does 'exact dissipation' refer to?
In the context of rent-seeking contests, what does 'exact dissipation' refer to?
What was the main hypothesis presented by Posner in his rent-seeking contest model?
What was the main hypothesis presented by Posner in his rent-seeking contest model?
What type of bidders did Posner assume in his model?
What type of bidders did Posner assume in his model?
What was the value of the available rents in Posner's rent-seeking contest model?
What was the value of the available rents in Posner's rent-seeking contest model?
'Exact dissipation' in rent-seeking contests implies that:
'Exact dissipation' in rent-seeking contests implies that:
According to Posner's model, what is the relationship between investment and probability of winning in a rent-seeking contest?
According to Posner's model, what is the relationship between investment and probability of winning in a rent-seeking contest?
Why did Posner consider risk-neutral bidders in his rent-seeking contest model?
Why did Posner consider risk-neutral bidders in his rent-seeking contest model?
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