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The Capacity Cost of Informational Screening

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  • Keita Kuwahara

Abstract

An advisor knows who would benefit from using a resource but cannot assign its use. Individuals have private assessments and may ignore advice. We study how their choices can respect a fixed usage limit. In our model, whenever coordination is possible, eliciting private assessments makes some harmful use unavoidable. Policies that maximize welfare, or even minimize harm, also forgo beneficial uses that direct assignment would permit. In those environments, observing assessments instead allows advice to achieve as much beneficial use as direct assignment, without harmful use. The loss therefore reflects the incentive cost of eliciting private beliefs while leaving use voluntary.

Suggested Citation

  • Keita Kuwahara, 2026. "The Capacity Cost of Informational Screening," Papers 2609.39077, arXiv.org.
  • Handle: RePEc:arx:papers:2609.39077
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    References listed on IDEAS

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