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Negative results in science: Blessing or (winner’s) curse

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  • Bobtcheff, Catherine
  • Mariotti, Thomas
  • Levy, Raphaël

Abstract

Two players receiving independent signals on a risky project with common value compete to be the rst to innovate. We characterize the equilibrium of this preemption game as the publicity of signals varies. Private signals create a winner's curse: investing rst implies that the rival has abstained from investing, possibly because he has privately received adverse information about the project. Since players want to gather more evidence in support of the project as a compensation, they invest later when signals are more likely to be private. Because of preemption, the NPV of investment is zero at equilibrium regardless of the publicity of signals. However, for a conservative planner who cares about avoiding unprotable investments, this implies that investment arises too early at equilibrium, and such a planner then prefers signals to be private. This provides a rationale against the mandatory disclosure of negative results in science, notably when competition is severe. Our results suggest that policy interventions should primarily tackle winner-takes-all competition, and regulate transparency only once competition is suciently mild.

Suggested Citation

  • Bobtcheff, Catherine & Mariotti, Thomas & Levy, Raphaël, 2021. "Negative results in science: Blessing or (winner’s) curse," TSE Working Papers 21-1202, Toulouse School of Economics (TSE).
  • Handle: RePEc:tse:wpaper:125474
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    2. Wagner, Peter A. & Klein, Nicolas, 2022. "Strategic investment and learning with private information," Journal of Economic Theory, Elsevier, vol. 204(C).

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