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Evidence Revelation in Competitions for Access

Author

Listed:
  • 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.

Suggested Citation

  • Christopher Cotton, 2010. "Evidence Revelation in Competitions for Access," Working Papers 2010-21, University of Miami, Department of Economics.
  • Handle: RePEc:mia:wpaper:2010-21
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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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    References listed on IDEAS

    as
    1. Bergemann, Dirk & Pesendorfer, Martin, 2007. "Information structures in optimal auctions," Journal of Economic Theory, Elsevier, vol. 137(1), pages 580-609, November.
    2. Péter Eső & Balázs Szentes, 2007. "Optimal Information Disclosure in Auctions and the Handicap Auction," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 705-731.
    3. Daniel J. Seidmann & Eyal Winter, 1997. "Strategic Information Transmission with Verifiable Messages," Econometrica, Econometric Society, vol. 65(1), pages 163-170, January.
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      • Feess Eberhard & Muehlheusser Gerd & Walzl Markus, 2004. "Unfair Contests," Research Memorandum 050, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    5. Matthias Dahm & Nicolás Porteiro, 2008. "Informational lobbying under the shadow of political pressure," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 30(4), pages 531-559, May.
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    8. 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 289-294, March.
    9. 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.
    10. Elchanan Ben-Porath & Barton L. Lipman, 2009. "Implementation and Partial Provability," Boston University - Department of Economics - Working Papers Series wp2009-002, Boston University - Department of Economics.
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

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

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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