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Symmetric vs Asymmetric Equilibria and Stochastic Stability in a Dynamic Game of Legislative Lobbying

Author

Listed:
  • Raouf Boucekkine

    (IMéRA - Institute for Advanced Studies - Aix-Marseille University, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Fabien Prieur

    (UPN - Université Paris Nanterre)

  • Benteng Zou

    (CREA - Center for Research in Economic Analysis - uni.lu - Université du Luxembourg = University of Luxembourg = Universität Luxemburg)

Abstract
We study a 2-players stochastic dynamic symmetric lobbying differential game. Players have opposite interests; at any date, each player invests in lobbying activities to alter the legislation in her own benefit. The payoffs are quadratic and uncertainty is driven by a Wiener process. We prove that while a symmetric Markov Perfect Equilibrium (MPE) always exists, an asymmetric MPE only emerges when uncertainty is large enough. In the latter case, the legislative state converges to a stationary invariant distribution. Interestingly enough, the implications for the rent dissipation problem are much more involved than in the deterministic counterpart: the symmetric MPE still yields a limited social cost while the asymmetric may yield significant losses. We also characterize the most likely asymptotic state, in particular regarding the level of uncertainty.

Suggested Citation

  • Raouf Boucekkine & Fabien Prieur & Benteng Zou, 2018. "Symmetric vs Asymmetric Equilibria and Stochastic Stability in a Dynamic Game of Legislative Lobbying," Working Papers halshs-01181214, HAL.
    • Handle: RePEc:hal:wpaper:halshs-01181214
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01181214v2
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    political lobbying; symmetric versus asymmetric equilibrium; stochastic differential games; stochastic stability; social cost of lobbying;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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