A Simple Model of Competitive Testing

A number of candidates are competing for a prize. Each candidate is privately informed about his type. The decision-maker who allocates the prize wants to give it to the candidate with the highest type. Each candidate can take a test that reveals his type at a cost. I show that if competition increases, candidates reveal more information when the cost is high, and less information when it is low. Nevertheless, the decision-maker always benefits from greater competition. If competition is large, mandatory disclosure is Pareto-dominated by voluntary disclosure. When the test is noisier, candidates are more likely to take it.