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Focal Randomization: An optimal mechanism for the evaluation of R&D

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  • Elise Brezis

Abstract

In most countries, governments intervene in the process of R&D by financing a substantial part of it. The mechanism employed for choosing the projects to be financed is a committee composed of experts who evaluate projects in their field of specialization, and decide which ones should be funded. This mechanism for evaluating projects is conservative. Proposals of new ideas are too often rejected, and inventions are commonly thrown out of the set of potential projects. In this paper, I propose a mechanism that will allow less conformity: focal randomization. Focal randomization mechanism (FRM) states that projects which are unanimously ranked at the top by all reviewers, will be adopted. Projects perceived as valueless by all are rejected, while projects that are ranked differently will be randomized. I compare the average return under the present and proposed mechanism. I examine under which conditions this new mechanism is preferable, and its consequences on economic growth.

Suggested Citation

  • Elise Brezis, 2006. "Focal Randomization: An optimal mechanism for the evaluation of R&D," DEGIT Conference Papers c011_035, DEGIT, Dynamics, Economic Growth, and International Trade.
  • Handle: RePEc:deg:conpap:c011_035
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    File URL: http://degit.sam.sdu.dk/papers/degit_11/C011_035.pdf
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    References listed on IDEAS

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    1. Adam B. Jaffe, 2002. "Building Programme Evaluation into the Design of Public Research-Support Programmes," Oxford Review of Economic Policy, Oxford University Press, vol. 18(1), pages 22-34, Spring.
    2. Nadiri, M.I., 1993. "Innovations and Technological Spillovers," Working Papers 93-31, C.V. Starr Center for Applied Economics, New York University.
    3. M. Ishaq Nadiri, 1993. "Innovations and Technological Spillovers," NBER Working Papers 4423, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Nestor Duch-Brown & Jose Garcia-Quevedo & Daniel Montolio, 2008. "Assessing the assignation of public subsidies: Do the experts choose the most efficient R&D projects?," Working Papers in Economics 207, Universitat de Barcelona. Espai de Recerca en Economia.

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