Lobbying policy makers: Share versus lottery contests

Abstract

In lobbying competition to influence a policy ranging over a continuum, lottery and share contests can be regarded as two alternative conflict resolution protocols. In the lottery contest, the policy is selected probabilistically whereas in the share contest the policy choice is deterministic. Although these two contest settings are equivalent for risk‐neutral lobbyists, this equivalence fails to hold when they are risk‐averse. We demonstrate that when lobbyists have concave preferences over policies and select their policy proposals, they strategically moderate their claims only under the (probabilistic) lottery setting. This action defuses the conflict and reduces the exerted effort. Consequently, risk‐averse contestants might unanimously prefer the lottery to the share contest.