An Application Game with Fees and Time Costs

Abstract

In an application game, agents decide whether to apply for the prize, and reviewing applica- tions allows the decision maker to learn agent qualifications and award prizes to qualified agents. The decision maker finds reviewing applications costly, and prefers not to review applications from agents with sufficiently low probability of being qualified. Positive application fees and time delays can assure that only those with a high-enough probability of being qualified apply for prizes. Applied to the journal submission process, in which tenured and untenured academic authors are affected differently by time delays, the model shows that using time delays instead of higher submission fees benefits tenured authors at the expense of both untenured authors and journal quality. Applied to the process of applying for a permit when there are both rich and poor potential applicants, the model shows that the decision maker should impose both application fees and time delays (e.g., red tape). In this case, eliminating fees benefits poor agents, while it harms rich agents and the decision maker; eliminating red tape benefits rich agents, while it harms poor agents and the decision maker.journal submission, red tape, application fees