Competition for a Prize

Rob van der Noll ()
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Rob van der Noll: CPB Netherlands Bureau for Economic Policy Analysis, and Erasmus Universiteit Rotterdam

No 06-013/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

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.

Keywords: asymmetric information; beauty contest design; award competition; information overload (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2006-01-20
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20060013

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