Auctionin Entry into Tournaments

TLDR

Uniform‑price and discriminatory‑price auctions are intuitively appealing but generally inefficient for selecting contestants. The study introduces a research tournament model with heterogeneous contestants and proposes a simple auction format to efficiently select the most qualified participants. The proposed auction format is easy to implement and selects top contestants regardless of heterogeneity. For many contests the optimal number of competitors is two, simplifying tournament design and emphasizing the need to choose highly qualified contestants.

Abstract

A research tournament model with heterogeneous contestants is presented. For a large class of contests the optimal number of competitors is two. This insight makes designing the tournament easier and highlights the importance of selecting highly qualified contestants. While customary uniform‐price and discriminatory‐price auctions are intuitively appealing mechanisms for solving this adverse selection problem, in practice they generally will not be efficient mechanism for selecting contestants. Instead, we propose an alternative auction format that is equally simple to implement and efficiently selects the most qualified contestants to compete, regardless of the form of contestant heterogeneity.