Limited Capacity in Project Selection: Competition Through Evidence Production

Raphael Boleslavsky and Christopher Cotton

No 274669, Queen's Economics Department Working Papers from Queen's University - Department of Economics

Abstract: An organization must decide which proposals to fund. In evaluating the proposals, the organization may rely on those applying for funding to produce evidence about the merits of their own proposals. We consider the role of a capacity constraint preventing the organization from funding all projects. Agents produce more (Blackwell) informative evidence about the merits of their proposals when there are capacity constraints. In a two agent model, we fully characterize the equilibrium under unlimited and limited capacity. Unless the prior strongly favors accepting both proposals, the funding organization is better off when its capacity is limited.

Keywords: Financial Economics; Marketing (search for similar items in EconPapers)
Pages: 38
Date: 2015-06
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Related works:
Journal Article: Limited capacity in project selection: competition through evidence production (2018)
Working Paper: Limited Capacity In Project Selection: Competition Through Evidence Production (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:quedwp:274669

DOI: 10.22004/ag.econ.274669

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