Government Expenditure on Research Plans and their Diversity

In this study, we consider research and development investment by the government. Our study is motivated by the bias in the budget allocation owing to the competitive funding system. In our model, each researcher presents research plans and expenses, and the government selects a research plan in two periods---before and after the government knows its favorite plan---and spends funds on the adopted program in each period. We demonstrate that, in a subgame perfect equilibrium, the government adopts equally as many active plans as possible. In an equilibrium, the selected plans are distributed proportionally. Thus, the investment in research projects is symmetric and unbiased. Our results imply that equally widespread expenditure across all research fields is better than the selection of and concentration in some specific fields.