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Screening Signal-Manipulating Agents via Contests

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  • Yingkai Li
  • Xiaoyun Qiu

Abstract

We study the design of screening mechanisms subject to competition and manipulation. A social planner has limited resources to allocate to multiple agents using only signals manipulable through unproductive effort. We show that the welfare-maximizing mechanism takes the form of a contest and characterize the optimal contest. We apply our results to two settings: either the planner has one item or a number of items proportional to the number of agents. We show that in both settings, with sufficiently many agents, a winner-takes-all contest is never optimal. In particular, the planner always benefits from randomizing the allocation to some agents.

Suggested Citation

  • Yingkai Li & Xiaoyun Qiu, 2023. "Screening Signal-Manipulating Agents via Contests," Papers 2302.09168, arXiv.org, revised Feb 2024.
    • Handle: RePEc:arx:papers:2302.09168
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    References listed on IDEAS

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