Incentives for Collective Innovation

Gregorio Curello ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: Agents exert hidden effort to produce randomly-sized innovations in a technology they share. Returns from using the technology grow as it develops, but so does the opportunity cost of effort, due to an ‘exploration-exploitation’ trade-off. As monitoring is imperfect, there exists a unique (strongly) symmetric equilibrium, and effort in any equilibrium ceases no later than in the single-agent problem. Small innovations may hurt all agents in the symmetric equilibrium, as they severely reduce effort. Allowing agents to discard innovations increases effort and payoffs, preserving uniqueness. Under natural conditions, payoffs rise above those of all equilibria with forced disclosure.

Keywords: dynamic games; imperfect monitoring; public goods; private information (search for similar items in EconPapers)
JEL-codes: C73 D82 (search for similar items in EconPapers)
Pages: 41
Date: 2024-06
New Economics Papers: this item is included in nep-cta, nep-gth and nep-mic
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