Temporary exclusion in repeated contests

Consider a population of agents who repeatedly compete for awards, as in the case of researchers annually applying for grants. Noise in the selection process may encourage entry of low-quality proposals, forcing the principal to commit large resources to reviewing applications and further increasing award misallocation. A temporary exclusion policy prohibits an agent from applying in the current period if they received a low evaluation in the previous. We study the steady-state equilibria under various policies of this type. With exclusion, agents that have low-quality applications self-select to stay out, which reduces the volume of submissions and mitigates award misallocation. At the same time, the volume of high-quality applications is also reduced due to the ineligibility of banned agents. We also show that exclusion has a distributional effect, where higher-ability agents exhibit more self-selection.