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

Raouf Boucekkine (1, 2) , Fabien Prieur (3) , Benteng Zou (4)

1 IMéRA - Institute for Advanced Studies - Aix-Marseille University
2 AMSE - Aix-Marseille Sciences Economiques
3 UPN - Université Paris Nanterre
4 CREA - Center for Research in Economic Analysis

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.

Mots clés: political lobbying; symmetric versus asymmetric equilibrium; stochastic differential games; stochastic stability; social cost of lobbying

Domaines: Economies et finances

Raouf Boucekkine, Fabien Prieur, Benteng Zou. Symmetric vs Asymmetric Equilibria and Stochastic Stability in a Dynamic Game of Legislative Lobbying. 2018. ⟨halshs-01181214v2⟩