Competition for a Prize

Tinbergen Institute Discussion Paper No. TI 06-013/1

24 Pages Posted: 21 Jan 2006

See all articles by Rob van der Noll

Rob van der Noll

Authority for Consumers & Markets (ACM)

Date Written: January 5, 2006

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

JEL Classification: D82

Suggested Citation

van der Noll, Rob, Competition for a Prize (January 5, 2006). Tinbergen Institute Discussion Paper No. TI 06-013/1, Available at SSRN: https://ssrn.com/abstract=877294 or http://dx.doi.org/10.2139/ssrn.877294

Rob Van der Noll (Contact Author)

Authority for Consumers & Markets (ACM) ( email )

Muzenstraat 41
Den Haag, 2511 WB
Netherlands
+31 70 7222581 (Phone)

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