Dynamic screening

Abstract

We study dynamic screening problems in which elements are subjected to noisy evaluations and, at every stage, some of the elements are rejected, whereas those remaining are independently re-evaluated in subsequent stages. We prove that, ceteris paribus, the quality of a screening process may not improve when the number of stages increases. Specifically, we examine the resulting elements' values and show that adding a single stage to a screening process may produce inferior results in terms of stochastic dominance, whereas increasing the number of stages substantially leads to a first-best outcome.