The Effects of Rivalry on Scientific Progress under Public vs Private Learning

Abstract

We offer a model of scientific progress in which uncertainty resolves
over time. We show that rivalry leads to less experimentation, extending
results for preemption games to experimentation with uncertain outcomes. We
compare experimentation duration and welfare when experimental outcomes are publicly versus privately observable. We show that public learning can generate more
experimentation and higher welfare when uncertainty about the feasibility of
a breakthrough is large; breakthroughs are rare even when they are feasible;
and experiments produce results infrequently. Our results shed light on
recent criticism of the science system.

Keywords: Stopping game, experimentation, learning, preemption, multiarmed bandit problem

JEL Classification: D83, O31