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Designing dynamic research contests

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  • Jean-Michel Benkert
  • Igor Letina

Abstract

This paper studies the optimal design of dynamic research contests. We introduce interim transfers, which are paid in every period while the contest is ongoing, to an otherwise standard setting. We show that a contest where: (i) the principal can stop the contest in any period, (ii) a constant interim transfer is paid to agents in each period while the contest is ongoing, and (iii) a final prize is paid once the principal stops the contest, is optimal for the principal and implements the first-best.

Suggested Citation

  • Jean-Michel Benkert & Igor Letina, 2016. "Designing dynamic research contests," ECON - Working Papers 235, Department of Economics - University of Zurich, revised Aug 2019.
  • Handle: RePEc:zur:econwp:235
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    File URL: http://www.econ.uzh.ch/static/wp/econwp235.pdf
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    References listed on IDEAS

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    1. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603.
    2. Benny Moldovanu & Aner Sela, 2001. "The Optimal Allocation of Prizes in Contests," American Economic Review, American Economic Association, vol. 91(3), pages 542-558, June.
    3. Igor Letina, 2016. "The road not taken: competition and the R&D portfolio," RAND Journal of Economics, RAND Corporation, vol. 47(2), pages 433-460, May.
    4. Igor Letina & Armin Schmutzler, 2019. "Inducing Variety: A Theory Of Innovation Contests," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(4), pages 1757-1780, November.
    5. Emmanuel Dechenaux & Dan Kovenock & Roman Sheremeta, 2015. "A survey of experimental research on contests, all-pay auctions and tournaments," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 609-669, December.
    6. Clark, Derek J & Riis, Christian, 1996. "A Multi-winner Nested Rent-Seeking Contest," Public Choice, Springer, vol. 87(1-2), pages 177-184, April.
    7. Richard L. Fullerton & Bruce G. Linster & Michael McKee & Stephen Slate, 2002. "Using Auctions To Reward Tournament Winners: Theory and Experimental Investigations," RAND Journal of Economics, The RAND Corporation, vol. 33(1), pages 62-84, Spring.
    8. Rieck, Thomas, 2010. "Information Disclosure in Innovation Contests," Bonn Econ Discussion Papers 16/2010, University of Bonn, Bonn Graduate School of Economics (BGSE).
    9. David Pérez‐Castrillo & David Wettstein, 2016. "Discrimination In A Model Of Contests With Incomplete Information About Ability," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57, pages 881-914, August.
    10. Lang, Matthias & Seel, Christian & Strack, Philipp, 2014. "Deadlines in stochastic contests," Journal of Mathematical Economics, Elsevier, vol. 52(C), pages 134-142.
    11. Kruse, Thomas & Strack, Philipp, 2015. "Optimal stopping with private information," Journal of Economic Theory, Elsevier, vol. 159(PB), pages 702-727.
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    Cited by:

    1. Igor Letina & Shuo Liu & Nick Netzer, 2020. "Optimal Contest Design: A General Approach," Diskussionsschriften dp2011, Universitaet Bern, Departement Volkswirtschaft.
    2. Dmitry Ryvkin, 2020. "To fight or to give up? Dynamic contests with a deadline," Working Papers wp2020_07_01, Department of Economics, Florida State University.

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    More about this item

    Keywords

    Innovation; dynamic contests; research contests; inducement prizes;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other

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