Abstract

http://ssrn.com/abstract=2382917
 


 



Managing Innovation in a Crowd


Daron Acemoglu


Massachusetts Institute of Technology (MIT) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Mohamed Mostagir


University of Michigan, Stephen M. Ross School of Business

Asuman E. Ozdaglar


Massachusetts Institute of Technology (MIT) - Department of Electrical Engineering and Computer Science

January 17, 2014

MIT Department of Economics Working Paper No. 14-04

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.

Number of Pages in PDF File: 35

Keywords: crowdsourcing, crowd innovation, hierarchies, matching

JEL Classification: D83, D20, L22

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Date posted: January 22, 2014 ; Last revised: February 25, 2014

Suggested Citation

Acemoglu, Daron and Mostagir, Mohamed and Ozdaglar, Asuman E., Managing Innovation in a Crowd (January 17, 2014). MIT Department of Economics Working Paper No. 14-04. Available at SSRN: http://ssrn.com/abstract=2382917 or http://dx.doi.org/10.2139/ssrn.2382917

Contact Information

Daron Acemoglu (Contact Author)
Massachusetts Institute of Technology (MIT) - Department of Economics ( email )
50 Memorial Drive
Room E52-380b
Cambridge, MA 02142
United States
617-253-1927 (Phone)
617-253-1330 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Mohamed Mostagir
University of Michigan, Stephen M. Ross School of Business ( email )
701 Tappan Street
Ann Arbor, MI MI 48109
United States
Asuman E. Ozdaglar
Massachusetts Institute of Technology (MIT) - Department of Electrical Engineering and Computer Science ( email )
50 Memorial Drive
Cambridge, MA 02139-4307
United States
617-324-0058 (Phone)
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