528. Resolving rent-seeking puzzles: A model of political influence via social signals

Cameron K Murray,  School of Economics Discussion Paper No. 528 April 2014, School of Economics, The University of Queensland.

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Abstract

The empirical observations of underinvestment, loyalty and inequality of access to rent-seeking activities are theoretical puzzles. Drawing on the concepts of power, trust and signals, a new model of political influence via trust-signalling agents is developed. This ‘trust-signalling’ model generates a much richer set of predictions about the market for political influence, resolves the three identified puzzles, and offers a number of testable predictions.