Optimal Project Selection Mechanisms
AbstractWe study mechanisms for selecting up to m out of n projects. Project managers’ private information on quality is elicited through transfers. Under limited liability, the optimal mechanism selects projects that maximize some function of the project’s observable and reported characteristics. When all reported qualities exceed their own project-specific thresholds, the selected set only depends on observable characteristics, not reported qualities. Each threshold is related to (i) the outside option level at which the cost and benefit of eliciting information on the project cancel out and (ii) the optimal value of selecting one among infinitely many ex ante identical projects.
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Bibliographic InfoPaper provided by Sciences Po Departement of Economics in its series Sciences Po Economics Discussion Papers with number 2013-08.
Date of creation: Jul 2013
Date of revision:
adverse selection; information acquisition; mechanism design; project selection; limited liability; R&D.;
Other versions of this item:
- Talia Bar & Sidartha Gordon, 2014. "Optimal Project Selection Mechanisms," American Economic Journal: Microeconomics, American Economic Association, American Economic Association, vol. 6(3), pages 227-55, August.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-08-05 (All new papers)
- NEP-CTA-2013-08-05 (Contract Theory & Applications)
- NEP-INO-2013-08-05 (Innovation)
- NEP-MIC-2013-08-05 (Microeconomics)
- NEP-PPM-2013-08-05 (Project, Program & Portfolio Management)
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