Competition for a Prize
AbstractI present a model in which individuals compete for a prize by choosing to apply or not. Abilities are private information and in attempt to select the best candidate, the committee compares applicants with an imperfect technology. The choice of application cost, size of the prize and use of information technology are being characterized. In equilibrium, the number of applicants is stochastic and may overload the committee. I show that in spite of overload, the optimal cost (size of the prize) is decreasing (increasing) in market size. Furthermore I show when having a perfect information technology is not optimal.
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Date of creation: 20 Jan 2006
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asymmetric information; beauty contest design; award competition; information overload;
Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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