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Evidence Revelation in Competitions for Access

  • Christopher Cotton

    ()

    (Department of Economics, University of Miami)

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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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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  1. Matthias Dahm & Nicolas Porteiro, 2005. "Informational Lobbying under the Shadow of Political Pressure," Discussion Papers 1409, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. 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.
  3. Bull, Jesse & Watson, Joel, 2004. "Evidence disclosure and verifiability," Journal of Economic Theory, Elsevier, vol. 118(1), pages 1-31, September.
  4. Prat, A., 1997. "Campaign Advertising and Voter Welfare," Discussion Paper 1997-118, Tilburg University, Center for Economic Research.
  5. Daniel J. Seidmann & Eyal Winter, 1997. "Strategic Information Transmission with Verifiable Messages," Econometrica, Econometric Society, vol. 65(1), pages 163-170, January.
  6. Dirk Bergemann & Martin Pesendorfer, 2001. "Information Structures in Optimal Auctions," Cowles Foundation Discussion Papers 1323, Cowles Foundation for Research in Economics, Yale University.
  7. Baye, M.R. & Kovenock, D. & De Vries, C.G., 1991. "Rigging The Lobbying Process: An Application Of The All- Pay Auction," Purdue University Economics Working Papers 1002, Purdue University, Department of Economics.
  8. 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.
  9. 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.
  10. E. Feess & Gerd Muehlheusser & M. Walzl, 2008. "Unfair contests," Journal of Economics, Springer, vol. 93(3), pages 267-291, 04.
    • Feess Eberhard & Muehlheusser Gerd & Walzl Markus, 2004. "Unfair Contests," Research Memorandum 050, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
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