Picking Winners in Rounds of Elimination

37 Pages Posted: 1 Sep 2012

See all articles by Suzanne Scotchmer

Suzanne Scotchmer

University of California - Department of Economics (Deceased); University of California, Berkeley - School of Law; National Bureau of Economic Research (NBER)

Junjie Zhou

National University of Singapore (NUS), Department of Economics

Date Written: July 30, 2012

Abstract

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."

Keywords: log supermodularity, rounds of elimination, picking winners, screening

JEL Classification: C, L2

Suggested Citation

Scotchmer, Suzanne and Zhou, Junjie, Picking Winners in Rounds of Elimination (July 30, 2012). Available at SSRN: https://ssrn.com/abstract=2120974 or http://dx.doi.org/10.2139/ssrn.2120974

Suzanne Scotchmer (Contact Author)

University of California - Department of Economics (Deceased)

Berkeley, CA 94720-3880
United States

University of California, Berkeley - School of Law

215 Boalt Hall
Berkeley, CA 94720-7200
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Junjie Zhou

National University of Singapore (NUS), Department of Economics ( email )

Singapore
Singapore

HOME PAGE: http://zhoujunjie.weebly.com/

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