Making the Best Even Better: How Idea Pool Structure can make the Top Ideas Exceptional

33 Pages Posted: 11 Jan 2012 Last revised: 2 Jul 2014

See all articles by Sanjiv Erat

Sanjiv Erat

University of California, San Diego (UCSD) - Rady School of Management

Date Written: May 12, 2012

Abstract

In any pool of ideas, it is often the case that a small fraction of top ideas have significantly higher quality, both in absolute terms and relative to other ideas in the pool. This study formulates a model of idea pools, and examines the impact of the “structure” of idea pools on the extent to which the top ideas in an idea pool are exceptional. Our results demonstrate that the dispersion of ideas in the pool (defined in terms of the dissimilarity between ideas in the pool) has a positive impact on the value derived from the top ideas. The empirical content of the model is assessed by examining the citations received by top patents in a patent pool, and results consistent with the theoretical model are found. Finally, the study examines the optimal design of idea pools, and managerial rules-of-thumb are derived for the optimal choice of idea pool size, and the dispersion of ideas within the pool.

Keywords: Innovation Tournaments, Pareto principle, idea pools, patents

Suggested Citation

Erat, Sanjiv, Making the Best Even Better: How Idea Pool Structure can make the Top Ideas Exceptional (May 12, 2012). Available at SSRN: https://ssrn.com/abstract=1983389 or http://dx.doi.org/10.2139/ssrn.1983389

Sanjiv Erat (Contact Author)

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

HOME PAGE: http://www.rady.ucsd.edu/faculty/directory/erat/

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