Designing Dynamic Research Tournaments

Igor Letina and Jean-Michel Benkert

VfS Annual Conference 2016 (Augsburg): Demographic Change from Verein für Socialpolitik / German Economic Association

Abstract: This paper considers the optimal design of dynamic research tournaments when the buyer can set time-dependent prizes. We derive the buyer-optimal tournament and show that it entails an increasing prize schedule. Remarkably, this allows the buyer to implement a global stopping rule. In particular, the optimal tournament attains the first-best. More generally, we show that global stopping rules can be implemented robustly and compare them to individual stopping rules which have been analyzed in the existing literature. We conclude by discussing policy implications of our findings and highlight that global stopping rules combine the best aspects of innovation races and fixed prize tournaments.

JEL-codes: D02 L19 O32 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-ino and nep-mic
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc16:145738

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