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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Inducing variety: a theory of innovation contests
Organization Unit
  • Igor Letina
  • Armin Schmutzler
  • English
Institution University of Zurich
Series Name Working paper series / Department of Economics
Number 200
ISSN 1664-7041
Number of Pages 49
Date 2019
Abstract Text This paper analyzes the design of innovation contests when the quality of an innovation depends on the research approach, but the best approach is unknown. Inducing a variety of research approaches generates an option value. We show that suitable contests can induce such variety. The buyer-optimal contest is a bonus tournament, where suppliers can choose only between a low bid and a high bid. This contest implements the socially optimal variety for a suitable parameter range. Finally, we compare the optimal contest to scoring auctions and fixed-prize tournaments.
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Other Identification Number merlin-id:12230
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Keywords Contests, tournaments, auctions, diversity, innovation, procurement, Innovation, Turnier , Auktion
Additional Information Revised version ; former titles: "Designing institutions for diversity" (July 2015), and "Designing Innovation Contests for Diversity" (Dec. 2015)