A Simple Model of Competitive Testing

Boris Ginzburg

MPRA Paper from University Library of Munich, Germany

Abstract: A number of candidates are competing for a prize. Each candidate is privately informed about his type. The decision-maker who allocates the prize wants to give it to the candidate with the highest type. Each candidate can take a test that reveals his type at a cost. I show that an increase in competition increases information revelation when the cost is high, and reduces it when the cost is low. Nevertheless, the decision-maker always benefits from greater competition. Candidates can be better off if the cost is higher. Mandatory disclosure is Pareto-dominated by voluntary disclosure unless competition is low. Finally, when the test is noisier, candidates are more likely to take it.

Keywords: information disclosure; testing; competition (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Date: 2019-01-03
New Economics Papers: this item is included in nep-des, nep-mic and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: A Simple Model of Competitive Testing (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:99463

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