Year: 2025
Type: article
Abstract: Multiple agents are competing for a prize. Each agent is privately informed about his type. The principal who allocates the prize wants to give it to the agent with the highest type. Each agent can take a test that reveals his type at a cost. I show that an increase in competition makes the principal more informed when the cost is high, and less informed when the cost is low. Nevertheless, the principal always benefits from greater competition. Making the test mandatory for receiving the prize is Pareto‐dominated by voluntary verification unless competition is low.
Source: Economic Inquiry
DOI: 10.1111/ecin.13289
Author: Boris Ginzburg
Institution: Universidad Carlos III de Madrid
Language: English
Topic: Game Theory and Applications
Field: Decision Sciences
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W2952396434