Conferences at Department of Economics, University of Toronto, Canadian Economic Theory Conference 2025

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Selection Procedures in Competitive Admission

Nathan Hancart*

Building: HEC Montréal - Édifice Hélène-Desmarais
Room: HEC
Date: 2025-05-02 10:30 am – 11:00 am
Last modified: 2025-04-19

Abstract


Two identical firms compete to attract and hire from a pool of candidates of unknown productivity. Firms simultaneously post a selection procedure which consists of a test and an acceptance probability for each test outcome. After observing the firms' selection procedures, each candidate can apply to one of them. Both firms have access to a limited set of feasible tests. The firms face two key considerations when choosing their selection procedure: the statistical properties of their test and the selection into the procedure by the candidates. I identify two partial orders on tests that are useful to characterise the equilibrium of this game: the test's accuracy (Lehmann, 1988) and difficulty. I show that in any symmetric equilibrium, the test chosen must be maximal in the accuracy order and minimal in the difficulty order. Intuitively, competition leads to maximal but misguided learning: firms end up having precise knowledge that is not payoff relevant. I also consider the cases where firms face capacity constraints, have the possibility of making a wage offer and the existence of asymmetric equilibria where one firm is more selective than another.

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