A market for connections

- We analyze rent-seeking with anti-corruption laws.
- Links between decision-makers and rent-seekers are costly for both.
- Rent-seekers can pay for being linked even when they cannot pay directly for spoils.
- There is a unique Walrasian network, for any expected value of spoils.
- Walrasian network coincides with the unique pair-wise stable network with transfers.

Government or company decisions on whom to hire or whom to give a contract are mostly delegated to politicians, public sector officials or human resource and procurement managers. Due to anti-corruption laws, agents cannot sell contracts that they are delegated to decide upon. Even if bribing is ruled out, those interested in the spoils may invest in a good relationship with the deciding agents in order to be remembered when the decision is made. In this paper, we analyze such markets for connections in the presence of convex costs of networking.