A Model of Grants Distribution: A Screening Approach

Suren Basov () and Peter Bardsley

No 252, Econometric Society 2004 Australasian Meetings from Econometric Society

Abstract: In this paper we develop a formal model of the optimal financing of research projects, when the projects differ in both their success probability and the cost of undertaking. We show that in the benchmark case of publicly observable costs the first best can be achieved. If the costs are private information, however, the optimal contract will imply some inefficiency. We provide the first order characterization of the optimal financing scheme in this case and explicitly find it, assuming CARA utility for the institutions

Keywords: multidimensional; screening (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2004-08-11
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ecm:ausm04:252

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