Focal Randomization: An optimal mechanism for the evaluation of R&D

Elise Brezis ()

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: In most countries, governments intervene in the process of R&D by financing a substantial part of it. The mechanism employed for choosing the projects to be financed is a committee composed of experts who evaluate projects in their field of specialization, and decide which ones should be funded. This mechanism for evaluating projects is conservative. Proposals of new ideas are too often rejected, and inventions are commonly thrown out of the set of potential projects. In this paper, I propose a mechanism that will allow less conformity: focal randomization. Focal randomization mechanism (FRM) states that projects which are unanimously ranked at the top by all reviewers, will be adopted. Projects perceived as valueless by all are rejected, while projects that are ranked differently will be randomized. I compare the average return under the present and proposed mechanism. I examine under which conditions this new mechanism is preferable, and its consequences on economic growth.

Pages: 18 pages JEL Classification:
Date: 2006-06
New Economics Papers: this item is included in nep-ino and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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