PRIVATELY INFORMED SEEKERS OF AN UNCERTAIN RENT

Two departures from antecedent rent-seeking models are invoked: a rent of unknown size is sought, and rent seekers obtain private imperfect estimates of this size. A symmetric equilibrium for a fixed number of rent seekers is characterized, and shown to underdissipate the rent. T hen a model of the decision to obtain private information and particip ate in the rent-seeking contest is built. The symmetric equilibrium pa rticipation probability equates expected profit to participation costs . A simple formula for underdissipation results: dissipation is incomp lete precisely by the expected aggregate participation costs. If an aw ard mechanism can attain a lower level of dissipation for a fixed numb er of seekers, then it will raise the endogenous probability of partic ipation, and as a result will dissipate less rent in the equilibrium w ith an endogenous number of seekers.