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A Simple Model of Competitive Testing

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  • Ginzburg, Boris

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.

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  • Ginzburg, Boris, 2019. "A Simple Model of Competitive Testing," MPRA Paper 99463, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:99463
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    Cited by:

    1. Boris Ginzburg, 2021. "Optimal Price Of Entry Into A Competition," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 280-286, January.
    2. Aleksei Smirnov & Egor Starkov, 2019. "Timing of predictions in dynamic cheap talk: experts vs. quacks," ECON - Working Papers 334, Department of Economics - University of Zurich.

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    More about this item

    Keywords

    information disclosure; testing; competition;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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