Managing Innovation in a Crowd

Daron Acemoglu, Mohamed Mostagir and Asuman Ozdaglar

No 19852, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Crowdsourcing is an emerging technology where innovation and production are sourced out to the public through an open call. At the center of crowdsourcing is a resource allocation problem: there is an abundance of workers but a scarcity of high skills, and an easy task assigned to a high-skill worker is a waste of resources. This problem is complicated by the fact that the exact difficulties of innovation tasks may not be known in advance, so tasks that require high-skill labor cannot be identified and allocated ahead of time. We show that the solution to this problem takes the form of a skill hierarchy, where tasks are first attempted by low-skill labor, and high-skill workers only engage with a task if less skilled workers are unable to finish it. This hierarchy can be constructed and implemented in a decentralized manner even though neither the difficulties of the tasks nor the skills of the candidate workers are known. We provide a dynamic pricing mechanism that achieves this implementation by inducing workers to self select into different layers. The mechanism is simple: each time a task is attempted and not finished, its price (reward upon completion) goes up.

JEL-codes: D20 D83 L22 (search for similar items in EconPapers)
Date: 2014-01
New Economics Papers: this item is included in nep-ino, nep-knm, nep-mic and nep-tid
Note: PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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