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Screening Signal-Manipulating Agents via Contests

Yingkai Li and Xiaoyun Qiu

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Abstract: We study the design of screening mechanisms subject to competition and manipulation. A social planner has limited resources to allocate to multiple agents using only signals manipulable through unproductive effort. We show that the welfare-maximizing mechanism takes the form of a contest and characterize the optimal contest. We apply our results to two settings: either the planner has one item or a number of items proportional to the number of agents. We show that in both settings, with sufficiently many agents, a winner-takes-all contest is never optimal. In particular, the planner always benefits from randomizing the allocation to some agents.

Date: 2023-02, Revised 2024-02
New Economics Papers: this item is included in nep-des, nep-gth and nep-mic
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Citations: View citations in EconPapers (3)

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