Digging for golden carrots: an analysis of research tournaments

摘要: Contracting for research is often infeasible because inputs are unobservable and outcomes cannot be verified by a court. Sponsoring tournament can resolve these problems. A model presented in which contestants compete to find the innovation of highest value sponsor. The winner receives prespecified prize. game has unique subgame-perfect equilibrium. Free entry not optimal equilibrium effort each researcher decreases number contestants. An optimally designed balances probability overshooting first-best quality level against falling short. Copyright 1995 American Economic Association.