Optimal Award Scheme in Innovation Tournaments

In an innovation tournament, an organizer solicits innovative ideas from a number of independent agents. Agents exert effort to develop their solutions, but their outcomes are unknown due to technical uncertainty and/or subjective evaluation criteria. To incentivize agents to make their best effort, the organizer needs to devise a proper award scheme. While extant literature either assumes a winner-take-all scheme a priori or shows its optimality under specific distributions for uncertainty, this paper derives necessary and sufficient conditions under which the winner-take-all scheme is optimal. These conditions are violated when agents perceive it very likely that only few agents receive high evaluation or when a tournament does not require substantial increase in agents’ marginal cost of effort to develop high-quality solutions. Yet, the winner-take-all scheme is optimal in many practical situations, especially when agents have symmetric beliefs about their evaluation. In this case, the organizer should offer a larger winner prize when he is interested in obtaining a higher number of good solutions, but interestingly the organizer need not necessarily raise the winner prize when anticipating more participants to a tournament. / The online appendix is available at https://doi.org/10.1287/opre.2016.1575

Innovation and Crowdsourcing Contests

In an innovation contest, an organizer seeks solutions to an innovation-related problem from a group of independent agents. Agents, who can be heterogeneous in their ability levels, exert efforts to improve their solutions, and their solution qualities are uncertain due to the innovation and evaluation processes. In this chapter, we present a general model framework that captures main features of a contest, and encompasses several existing models in the literature. Using this framework, we analyze two important decisions of the organizer: a set of awards that will be distributed to agents and whether to restrict entry to a contest or to run an open contest. We provide a taxonomy of contest literature, and discuss past and current research on innovation contests as well as a set of exciting future research directions

Co-opetition models for governing professional football

In recent years, models for co-creating value in a business-to-business context have often been examined with the aim of studying the strategies implemented by and among organisations for competitive and co-operative purposes. The traditional concepts of competition and co-operation between businesses have now evolved, both in terms of the sector in which the businesses operate and in terms of the type of goods they produce. Many researchers have, in recent times, investigated the determinants that can influence the way in which the model of co-opetition can be applied to the football world. Research interest lies in the particular features of what makes a good football. In this paper, the aim is to conduct an analysis of the rules governing the “football system”, while also looking at the determinants of the demand function within football entertainment. This entails applying to football match management the co-opetition model, a recognised model that combines competition and co-operation with the view of creating and distributing value. It can, therefore, be said that, for a spectator, watching sport is an experience of high suspense, and this suspense, in turn, depends upon the degree of uncertainty in the outcome. It follows that the rules ensuring that both these elements can be satisfied are a fertile ground for co-operation between clubs, as it is in the interest of all stakeholders to offer increasingly more attractive football, in comparison with other competing products. Our end purpose is to understand how co-opetition can be achieved within professional football

Idea Contests: How to Design Feedback for an Efficient Contest

Inviting the public or a targeted group of individuals to submit their ideas or solutions to a specific problem or challenge within a predefined period of time is called an “idea contest.” Idea contests are the straightforward mechanism to solicit and leverage the innovation and the intelligence of thousands of individuals. With the advent of the Internet, companies can easily organize idea contests with an easy access for anyone to participate from anywhere around the world. A contest organizer needs to design a contest so that more individuals are encouraged to participate, generate more innovative ideas/solutions, and to remain active throughout the contest. In my dissertation, I explore the effects of idea contest parameters –such as award size and structure, contest duration, the visibility of submissions, and the feedback- on the participation, motivation, and performance of individuals before and after joining a contest. Feedback, as the primary focus of my dissertation, is a less studied parameter in the context of idea contests. In my first essay, I investigate the relative importance of each contest design parameter, particularly feedback, with each other in motivating individuals to participate in a contest. In this regard, I both ran a conjoint study among real designers and collected online data from 99designs website. Feedback plays an important role in increasing the likelihood of participation and the participation rate for an idea contest. In the second essay, I explore the effect of two different types of feedback –absolute vs. relative- on the performance of participants during an idea contest. By running a real contest with participants from a major public university, I measured how participants in an idea contest react to different types of feedback. The likelihood of revising ideas as well as the quality of ideas submitted were the primary dependent variables in this field experiment.Marketing and Entrepreneurship, Department o

Playing in Invisible Markets: Innovations in the Market for Toilets to Harness the Economic Power of the Poor

Sanitation is at the heart of not only environmental security but also food security and health. Today about 41% of the global population or about 2.6 billion people do not have access to toilets and about 42,000 people die every week due to drinking water polluted with faecal matter. The problem is most acute in India, China, many countries of Africa and a few countries of Latin America. Why is there such a crisis in the toilets market? How much of the present problem is due to a lack of supply and how much is it due to a lack of demand? What is the optimal role of the State, the firms and the NPOs? The present paper attempts to give some insight on the above questions through the case study of the market for toilets for the poor in India. It examines the toilet history and achievements of India, the innovations in the market for toilets targeting the group at the bottom of the income pyramid and the factors that influence the adoption and usage of toilets in an Indian coastal village, in order to infer answers to the above questions.Toilets, Innovation, India, Health, Hygiene, Sanitation, BOP, Income Inequality, Empowerment, Entrepreneurship, Government Policy

Optimal Rules for Patent Races

There are two important rules in a patent race: what an innovator must accomplish to receive the patent and the allocation of the benefits that flow from the innovation. Most patent races end before R&D is completed and the prize to the innovator is often less than the social benefit of the innovation. We study the optimal combination of prize and minimal accomplishment necessary to obtain a patent in a dynamic multistage innovation race. A planner, who cannot distinguish between competing firms, chooses the innovation stage at which the patent is awarded and the magnitude of the prize to the winner. We examine both social surplus and consumer surplus maximizing patent race rules. We show that a key consideration is the efficiency costs of transfers and of monopoly power to the patentholder. We show that races are undesirable only when efficiency costs are low, firms have similar technologies, and the planner maximizes social surplus. However, in all other circumstances, the optimal policy spurs innovative effort through a race of nontrivial duration. Races are also used to filter out inferior innovators.

Technology Prizes for Climate Change Mitigation

We analyze whether technology inducement prizes could be a useful complement to standard research grants and contracts in developing climate change mitigation technologies. We find that there are important conceptual advantages to using inducement prizes in certain circumstances. These conceptual inferences are borne out by an examination of the track record of prizes inducing research into public goods, including relevant energy technologies. However, we also find that the prizes’ successes are contingent on their proper design. We analyze how several important design elements could influence the effectiveness of a climate technology prize.inducement prize, research and development, climate change, technology, policy

Job Market Signalling of Relative Position, or Becker Married to Spence

We consider a matching model of the labour market where workers that differ in quality send signals to firms that are also vertically differentiated. Signals allow assortative matching in which the highest quality workers send the highest signals and are hired by the best firms. Matching is consider both when wages are fixed (non-transferable utility) and when they are fully flexible (utility is transferable). In both cases payoffs are determined by relative position - the best worker gets the best job. The standard signalling model which communicates the signaller’s absolute type is a special case of the current model of signalling relative position. Furthermore, in the relative model, equilibrium strategies and payoffs depend on the distributions of types of workers and the distribution of firms. This is in contrast with separating equilibria of the standard model which do not respond to changes in supply or demand. Despite incomplete information, equilibrium investment in education by low ability workers can be inefficiently low.Signalling, relative position, matching, tournaments.

Setting Incentives for Collaboration Among Agricultural Scientists: Application of Principal-Agent Theory to Team Work

�The USDA is attempting to shift more research funds into competitive grants involving collaboration across disciplines on large projects. This type of research structure raises a host of information and incentive issues. The objective of this paper is to shed new light on principal-agent problems that are likely to arise in this new funding structure.incentives; Principal-agent model; team research; competitive grants; multi-disciplinary research