A player can engage in productive effort which adds value or in unproductive effort, buttering up the boss. There are two workers and one is more productive than the other: The marginal product of effort for worker A is bigger than the marginal product of effort for worker B. Productive effort is rewarded with monetary payment or career advancement and so is effort expended at buttering up the boss.
We get the following simple insight: The higher productivity worker faces a higher opportunity cost of buttering up the boss. He will spend less time on unproductive activity and more time on productive activity.
(Acknowledgement: Loosely based on a model presented by Stergios Skaperdas)
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April 27, 2011 at 6:48 am
Mounir
This should hold for all rent seeking settings, no?
April 29, 2011 at 6:29 pm
Jonathan Weinstein
This is a nice point. If that was all there was to it, we should also see the more productive person advance further in equilibrium. Sadly, people also differ in another dimension: how painful they find it to be insincere. Put another way, they differ in “ability” both in productivity and in buttering-up.
Maybe the fellow in the cartoon is driven by desperation….or maybe he just doesn’t mind puckering up.