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A simple model of competitive testing

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  • Boris Ginzburg

Abstract

Multiple agents are competing for a prize. Each agent is privately informed about his type. The principal who allocates the prize wants to give it to the agent with the highest type. Each agent can take a test that reveals his type at a cost. I show that an increase in competition makes the principal more informed when the cost is high, and less informed when the cost is low. Nevertheless, the principal always benefits from greater competition. Making the test mandatory for receiving the prize is Pareto‐dominated by voluntary verification unless competition is low.

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  • Boris Ginzburg, 2025. "A simple model of competitive testing," Economic Inquiry, Western Economic Association International, vol. 63(3), pages 888-902, July.
    • Handle: RePEc:bla:ecinqu:v:63:y:2025:i:3:p:888-902
    DOI: 10.1111/ecin.13289
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    Cited by:

    1. Aleksei Smirnov & Egor Starkov, 2019. "Timing of predictions in dynamic cheap talk: experts vs. quacks," ECON - Working Papers 334, Department of Economics - University of Zurich.
    2. Boris Ginzburg, 2021. "Optimal Price Of Entry Into A Competition," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 280-286, January.

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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