Inducing Variety: A Theory of Innovation Contests

Letina, Igor; Schmutzler, Armin (2019). Inducing Variety: A Theory of Innovation Contests. International economic review, 60(4), pp. 1757-1780. Wiley 10.1111/iere.12403

[img] Text
Letina_et_al-2019-International_Economic_Review.pdf - Published Version
Restricted to registered users only
Available under License Publisher holds Copyright.

Download (270kB) | Request a copy

This article analyzes the design of innovation contests when the quality of an innovation depends on the research approach, but the best approach is unknown. Inducing a variety of research approaches generates an option value. We show that suitable contests can induce such variety. The buyer‐optimal contest is a bonus tournament, where suppliers can choose only between a low bid and a high bid. This contest implements the socially optimal variety for a suitable parameter range. Finally, we compare the optimal contest to scoring auctions and fixed‐prize tournaments.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics > Microeconomics

UniBE Contributor:

Letina, Igor

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

1468-2354

Publisher:

Wiley

Language:

English

Submitter:

Dino Collalti

Date Deposited:

15 Apr 2020 08:39

Last Modified:

15 Apr 2020 08:39

Publisher DOI:

10.1111/iere.12403

BORIS DOI:

10.7892/boris.138741

URI:

https://boris.unibe.ch/id/eprint/138741

Actions (login required)

Edit item Edit item
Provide Feedback