Abstract
Rent seeking contest shapes the risk preference of the contestants. It instills in the weaker contestant who has little to lose and much to gain a preference for risk taking, and the weaker the contestant, the stronger the instilled preference for risk taking. On the other hand, it causes the stronger contestant who has much to lose and little to gain to have a preference for risk aversion and, the stronger the contestant, the more intense the instilled preference for risk aversion. Increases in the economies of scale in rent seeking amplify the effects of rent seeking contests on the risk preference of the contestants. The paper also derives the Arrow-Pratt measure of absolute risk aversion for the contestants.
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