Self-Selection, Evaluation and Optimal Ordeals
We propose a model where a privately informed agent submits an application to obtain a benefit, such as a patent approval, a journal publication or a research grant. The evaluator observes a noisy signal about the applicant’s merit and decides whether to approve or reject the application. The application serves as a costly ordeal, encouraging self-selection of applicants more likely to succeed. What is the optimal ordeal the evaluator should impose on the applicant? When is it optimal to make the application costless? We characterize the optimal ordeal and identify monotonicity of the hazard ratios (ratio of hazard rates) of the applicant’s and evaluator’s signals as the driving condition for the results.
Date:
10 May 2024, 14:15 (Friday, 3rd week, Trinity 2024)
Venue:
Manor Road Building, Manor Road OX1 3UQ
Venue Details:
Seminar Room G or https://zoom.us/j/93867615769?pwd=T1NsTEVwNE40R3pEVW9yTlBicG1mdz09
Speaker:
Marco Ottaviani (Bocconi University)
Organising department:
Department of Economics
Part of:
Nuffield Economic Theory Seminar
Booking required?:
Not required
Audience:
Members of the University only
Editor:
Edward Clark
