Abstract: The conflict of rent-seeking competition will lead to significant waste of resources. Based on the basic framework of rent-seeking competition theory and introducing two kinds of utility: “joy of winning” and “frustration of loss”, this paper gives further proof of the overbidding behavior in competition and to get the minimum allocation amount for the agents to avoid competition conflict. In addition, based on inequality aversion model, considering ex ante inequality aversion preference and ex post inequality aversion preference, this paper builds a rent-seeking competition conflict utility model and uses it to conduct a theoretical deduction. The result shows that, affected by advantage inequality aversion preference and disadvantage inequality aversion preference, the Nash equilibrium solution of the parties avoiding rent-seeking competition is not consistent with that of basic theory. Our research shows that the influence of “joy of winning” and the preference of fairness will increase the overbidding behavior of rent-seeking competition. The utility of “frustration of loss” will lower the expectation of competition investment. Furthermore, this paper probes into the causes of excessive irrational and inefficient rent-seeking competition in reality from the perspective of behavioral economy and then seeks an equilibrium solution to avoid rent-seeking competition.

Key words: rent-seeking contests, equality preference, inequality aversion, joy of winning, frustration of loss