Firms and governments often use R&D contests to incentivize suppliers to develop and deliver innovative products. The optimal design of such contests depends on empirical primitives: the cost of research, the uncertainty in outcomes, and the surplus participants capture. Can R&D contests in real‐world settings be redesigned to increase social surplus? I ask this question in the context of the Department of Defense's Small Business Innovation Research program, a multistage R&D contest. I develop a structural model to estimate the primitives from data on R&D and procurement contracts. I find that the optimal design substantially increases social surplus, and simple design changes in isolation (e.g., inviting more contestants) can capture up to half these gains; however, these changes reduce the DOD's own welfare. These results suggest there is substantial scope for improving the design of real‐world contests but that a designer must balance competing objectives.

Fiduciary duty aims to solve principal‐agent problems, and the United States is in the middle of a protracted debate surrounding the merits of extending it to all financial advisers. Leveraging a transaction‐level data set of deferred annuities and state‐level variation in common law fiduciary duty, we find that it raises risk‐adjusted returns by 25 bp and leads to a 16% decline in the entry of affected firms. Through the lens of a model of entry and advice provision, we show that this effect can be due to both an increase in fixed costs and an increase in the cost of providing low‐quality advice. We show how to disentangle these channels and find that both are empirically relevant. Counterfactual simulations show that further increases in the stringency of fiduciary duty monotonically improve advice quality.