Temporary exclusion in repeated contests

TL;DR

This paper analyzes how temporary exclusion policies in repeated contests influence agent behavior and quality of submissions, showing that exclusion can improve self-selection and reduce low-quality entries under certain conditions.

Contribution

It introduces and compares the effects of temporary exclusion policies on equilibrium outcomes in repeated contests, extending the analysis to general exclusion rules.

Findings

Exclusion policies lead to more self-selection when benefits are high.

Exclusion reduces low-quality entries in steady state.

Better agents tend to self-select more under exclusion.

Abstract

Consider a population of agents who repeatedly compete for awards, as in the case of researchers annually applying for grants. Noise in the selection process may encourage entry of low quality proposals, forcing the principal to commit large resources to reviewing applications and further increasing award misallocation. A \emph{temporary exclusion} policy prohibits an agent from applying in the current period if they were rejected in the previous. We compare the steady state equilibria of the games with and without exclusion. Whenever the benefit from winning is sufficiently large exclusion results in more self-selection, eliminating entry of low quality applications. We extend the analysis to more general exclusion policies. We also show that exclusion has a distributional effect, where better able agents exhibit more self-selection.