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The Effects of Prize Structures on Innovative Performance

Joshua Graff Zivin and Elizabeth Lyons

No 26737, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Successful innovation is essential for the survival and growth of organizations but how best to incentivize innovation is poorly understood. We compare how two common incentive schemes affect innovative performance in a field experiment run in partnership with a large life sciences company. We find that a winner-takes-all compensation scheme generates significantly more novel innovation relative to a compensation scheme that offers the same total compensation, but shared across the ten best innovations. Moreover, we find that the elasticity of creativity with respect to compensation schemes is much larger for teams than individual innovators.

JEL-codes: J24 M54 O32 (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-exp, nep-hrm, nep-ino, nep-lma and nep-sbm
Note: LS PR
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