Innovation Contests

David Perez-Castrillo and David Wettstein ()

No 4712, CESifo Working Paper Series from CESifo

Abstract: We study innovation contests with asymmetric information and identical contestants, where contestants’ efforts and innate abilities generate inventions of varying qualities. The designer offers a reward to the contestant achieving the highest quality and receives the revenue generated by the innovation. We characterize the equilibrium behavior, outcomes and payoffs for both nondiscriminatory and discriminatory (where the reward is contestant-dependent) contests. We derive conditions under which the designer obtains a larger payoff when using a discriminatory contest and describe settings where these conditions are satisfied.

Keywords: contests; auctions; innovation; discrimination (search for similar items in EconPapers)
JEL-codes: D44 J71 O31 (search for similar items in EconPapers)
Date: 2014
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Related works:
Working Paper: Innovation Contests (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_4712

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