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Evidence Revelation in Competitions for Access

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  • Christopher Cotton

    ()
    (Department of Economics, University of Miami)

Abstract

A decision maker must divide a resource between multiple agents. The decision maker prefers to award the resource to the most-qualified agents, but he is initially uncertain about agent qualifications. Although he can learn about qualifications by granting the agents “access (e.g., by taking time to review applications, hold inter- views, or conduct an investigation), he is time-constrained and cannot grant access to everyone. This paper considers how the decision maker should allocate the resource when agent qualifications are independent of their valuations; that is, when the optimal allocation cannot be achieved by selling the resource directly through an auction. We present a class of mechanisms in which the access is awarded through a competition in which higher payments (e.g., time, money) correspond to a greater likelihood of receiving access. After learning the qualifications of those agents with access, the deci- sion maker then chooses an allocation based on his updated beliefs. The analysis shows that there always exists competition for access mechanisms in which the decision maker becomes fully informed about the qualifications of all agents (even through only some of the agents reveal their qualifications through access). That is, the decision maker can always award access in such a way that he learns about and can implement his preferred resource allocation. When agents only differ in terms of their qualifications, a traditional all-pay auction is sufficient for full revelation.

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File URL: http://www.bus.miami.edu/_assets/files/faculty-and-research/academic-departments/eco/eco-working-papers/2010/wp-2010-21-Evidence-Revelation-in-Competitions.pdf
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Bibliographic Info

Paper provided by University of Miami, Department of Economics in its series Working Papers with number 2010-21.

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Length: 23 pages
Date of creation: Jul 2010
Date of revision:
Publication status: Forthcoming: Working Paper
Handle: RePEc:mia:wpaper:2010-21

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Related research

Keywords: Verifiable evidence disclosure; hard information; all-pay auction; handicapped auction; access; lobbying;

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References

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  1. Prat, Andrea, 1999. "Campaign Advertising and Voter Welfare," CEPR Discussion Papers 2152, C.E.P.R. Discussion Papers.
  2. Bergemann, Dirk & Pesendorfer, Martin, 2007. "Information structures in optimal auctions," Journal of Economic Theory, Elsevier, vol. 137(1), pages 580-609, November.
  3. Daniel J. Seidmann & Eyal Winter, 1997. "Strategic Information Transmission with Verifiable Messages," Econometrica, Econometric Society, vol. 65(1), pages 163-170, January.
  4. Bull, Jesse & Watson, Joel, 2000. "Evidence Disclosure and Verifiability," University of California at San Diego, Economics Working Paper Series qt6th0060j, Department of Economics, UC San Diego.
  5. Cotton, Christopher, 2009. "Should we tax or cap political contributions? A lobbying model with policy favors and access," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 831-842, August.
  6. Baye, Michael R & Kovenock, Dan & de Vries, Casper G, 1993. "Rigging the Lobbying Process: An Application of the All-Pay Auction," American Economic Review, American Economic Association, vol. 83(1), pages 289-94, March.
  7. Matthias Dahm & Nicolás Porteiro, 2006. "Informational Lobbying under the Shadow of Political Pressure," Working Papers 06.14, Universidad Pablo de Olavide, Department of Economics.
  8. Péter Eső & Bal�zs Szentes, 2007. "Optimal Information Disclosure in Auctions and the Handicap Auction," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 705-731.
  9. E. Feess & Gerd Muehlheusser & M. Walzl, 2008. "Unfair contests," Journal of Economics, Springer, vol. 93(3), pages 267-291, 04.
  10. Lipman Barton L. & Seppi Duane J., 1995. "Robust Inference in Communication Games with Partial Provability," Journal of Economic Theory, Elsevier, vol. 66(2), pages 370-405, August.
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