Journal of Political Economy Vol. 125 No. 5 2017
Contests for Experimentation
Abstract
We study contests for innovation with learning about the innovation’s feasibility and opponents’ outcomes. We characterize contests that maximize innovation when the designer chooses a prize-sharing scheme and a disclosure policy. A “public winner-takes-all” contest dominates public contests—where any success is immediately disclosed—with any other prize-sharing scheme as well as winner-takes-all contests with any other disclosure policy. Yet, jointly modifying prize sharing and disclosure can increase innovation. In a broad class of mechanisms, it is optimal to share the prize with disclosure following a certain number of successes; under simple conditions, a “hidden equal-sharing” contest is optimal.
- DOI
- 10.1086/693040
- Volume
- 125
- Issue
- 5
- Pages
- 1523-1569
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref