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Competition for a Prize

Author

Listed:
  • Rob van der Noll

    (CPB Netherlands Bureau for Economic Policy Analysis, and Erasmus Universiteit Rotterdam)

Abstract

I present a model in which individuals compete for a prize by choosing to apply or not. Abilities are private information and in attempt to select the best candidate, the committee compares applicants with an imperfect technology. The choice of application cost, size of the prize and use of information technology are being characterized. In equilibrium, the number of applicants is stochastic and may overload the committee. I show that in spite of overload, the optimal cost (size of the prize) is decreasing (increasing) in market size. Furthermore I show when having a perfect information technology is not optimal.

Suggested Citation

  • Rob van der Noll, 2006. "Competition for a Prize," Tinbergen Institute Discussion Papers 06-013/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20060013
    as

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    File URL: https://papers.tinbergen.nl/06013.pdf
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    References listed on IDEAS

    as
    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    2. Hvide, Hans K. & Kristiansen, Eirik G., 2003. "Risk taking in selection contests," Games and Economic Behavior, Elsevier, vol. 42(1), pages 172-179, January.
    3. David Malueg & Yongsheng Xu, 1997. "Endogenous information quality: A job-assignment application," Journal of Economics, Springer, vol. 65(2), pages 163-180, June.
    4. John G. Riley, 2001. "Silver Signals: Twenty-Five Years of Screening and Signaling," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 432-478, June.
    5. Curtis R. Taylor, 1999. "Time-on-the-Market as a Sign of Quality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(3), pages 555-578.
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    More about this item

    Keywords

    asymmetric information; beauty contest design; award competition; information overload;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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    This paper has been announced in the following NEP Reports:

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