INDUCING VARIETY: A THEORY OF INNOVATION CONTESTS

• 成果类型: Article
• 署名作者: Letina, Igor; Schmutzler, Armin
• 署名单位: University of Bern; University of Zurich
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12403
• 发表日期: 2019
• 页码: 1757-1780
• 关键词: optimal-design; procurement; COMPETITION; auctions; tournaments; preferences; uncertainty; incentives; search; prizes

摘要

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.