Picking Winners in Rounds of Elimination
University of California - Department of Economics ; School of Law, University of California, Berkeley; National Bureau of Economic Research (NBER)
Shanghai University of Finance and Economics
July 30, 2012
We study the optimal way to select projects or agents in environments where information arrives in well defined rounds. Examples include academic environments where review periods are set by policy, aptitude tests such as those given by software developers to programmers applying for jobs, venture capital protocols where the rounds of funding may be stopped before the project is complete, and FDA testing, where drugs can be dropped at well defined junctures. Sequential rounds of elimination reduce the cost of selection, but also reduce the average quality of surviving projects. We characterize the nature of the optimal screening process with and without "memory."
Number of Pages in PDF File: 37
Keywords: log supermodularity, rounds of elimination, picking winners, screening
JEL Classification: C, L2
Date posted: September 1, 2012
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