Header

UZH-Logo

Maintenance Infos

Inducing variety: a theory of innovation contests


Letina, Igor; Schmutzler, Armin (2019). Inducing variety: a theory of innovation contests. Working paper series / Department of Economics 200, University of Zurich.

Abstract

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 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.

Abstract

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 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.

Statistics

Downloads

72 downloads since deposited on 22 Jul 2015
34 downloads since 12 months
Detailed statistics

Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:L14, L22, L23
Uncontrolled Keywords:Contests, tournaments, auctions, diversity, innovation, procurement
Language:English
Date:February 2019
Deposited On:22 Jul 2015 13:22
Last Modified:24 Sep 2019 21:11
Series Name:Working paper series / Department of Economics
Number of Pages:49
ISSN:1664-7041
Additional Information:Revised version ; former titles: "Designing institutions for diversity" (July 2015), and "Designing Innovation Contests for Diversity" (Dec. 2015)
OA Status:Green
Official URL:http://www.econ.uzh.ch/static/workingpapers.php?id=879

Download

Green Open Access

Content: Published Version
Filetype: PDF (Version July 2015) - Registered users only
Size: 590kB
Content: Updated Version
Filetype: PDF (Revised version December 2015) - Registered users only
Size: 744kB
Content: Updated Version
Filetype: PDF (Revised version June 2017) - Registered users only
Size: 565kB
Download PDF  'Inducing variety: a theory of innovation contests'.
Preview
Content: Updated Version
Filetype: PDF (Revised version February 2019)
Size: 560kB