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Experimenting with Contests for Experimentation

We report an experimental test of alternative rules in multi-stage innovation contests when success may not be feasible and contestants may learn from each other. Following Halac et al. (forthcoming), the planner can vary the prize allocation rule from Winner-Take-All in which the rst successful innovator receives the entire prize to Shared in which all successful innovators during the contest duration share in the prize. The planner can also vary the information disclosure policy from Public in which at each period, all information about contestants' past successes and failures is publicly available, to Private, in which contestants only know their own histories. In our setting, the theoretically optimal contest design depends on the probability of successful innovation, given that innovation is feasible. Under some parameters the designer will prefer a WTA-Public contest; while, under others he will prefer Shared-Private. Our experiments provide evidence that Private disclosure contests behaviorally dominate Public disclosure, regardless of the prize allocation rule, and moreover that Shared-Private contests dominate WTA-Private contests.

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File URL: http://www.sfu.ca/econ-research/RePEc/sfu/sfudps/dp16-08.pdf
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Paper provided by Department of Economics, Simon Fraser University in its series Discussion Papers with number dp16-08.

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Length: 24
Date of creation: 02 Apr 2016
Handle: RePEc:sfu:sfudps:dp16-08
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Department of Economics, Simon Fraser University, 8888 University Drive, Burnaby, BC, V5A 1S6, Canada

Phone: (778)782-3508
Fax: (778)782-5944
Web page: http://www.sfu.ca/economics.html

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  17. Nisvan Erkal & Deborah Minehart, 2014. "Optimal Technology Sharing Strategies in Dynamic Games of R&D," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(1), pages 149-177, 03.
  18. Glenn C. Loury, 1979. "Market Structure and Innovation," The Quarterly Journal of Economics, Oxford University Press, vol. 93(3), pages 395-410.
  19. Claude d'Aspremont & Sudipto Bhattacharya & Louis-Andre Gerard-Varet, 2000. "Bargaining and Sharing Innovative Knowledge," Review of Economic Studies, Oxford University Press, vol. 67(2), pages 255-271.
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