Inducing variety: A theory of innovation contests

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This paper 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 is desirable because it generates an option value. We show that suitable contests can induce such variety. The optimal contest is a bonus tournament, where suppliers can choose only between a low bid and a high bid. We then compare the optimal contest to other commonly studied institutions, such as scoring auctions and fixed-prize tournaments.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 200

Classification and Topics

• Classification: Wirtschaft ; Transactional Relationships; Contracts and Reputation; Networks ; Firm Organization and Market Structure ; Organization of Production
• Subject: Contests ; tournaments ; auctions ; diversity ; innovation ; procurement

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Letina, Igor ; Schmutzler, Armin
• Event: Veröffentlichung
• (who): University of Zurich, Department of Economics
• (where): Zurich
• (when): 2017

Further information

• DOI: doi:10.5167/uzh-111830
• Handle: http://hdl.handle.net/10419/173407