Competition for Access and Full Revelation of Evidence

Christopher Cotton

No 2010-12, Working Papers from University of Miami, Department of Economics

Abstract: A decision maker must divide a prize between multiple agents. The prize may be divisible (e.g., a budget, pork-barrel spending) in which case he prefers to award larger shares of the prize to relatively more-qualified agents, or it may be non-divisible (e.g., jobs, college admissions) in which case he prefers to award the limited number of prizes to the most-qualified agents. He is, however, ex ante uncertain about agent quali cations. Agents may directly reveal verifiable evidence about their qualifications to the decision maker only if the decision maker grants them \access" (e.g., he takes time to review their applications, hold interviews, or conduct an investigation). The time-constrained decision maker must decide which agents receive access, as he cannot grant access to everyone. One way to award access is through a competition, where agents submit payments (e.g., time, money) and higher payments correspond to a greater likelihood of receiving access. 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 though only some agents reveal their qualifications through access). That is, the decision maker can award access in such a way that he always becomes fully informed and chooses his preferred prize allocation. The paper derives such full-revelation mechanisms, and determines when awarding access through a traditional all-pay auction is sufficient for full revelation.

Keywords: Verifiable evidence disclosure; hard information; all-pay auction; handicap auction; access; lobbying (search for similar items in EconPapers)
JEL-codes: D44 D78 D82 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2009-08
New Economics Papers: this item is included in nep-cta
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