49 Pages Posted: 27 Apr 2015 Last revised: 30 Dec 2016
Date Written: December 30, 2016
Traditional innovation models assume that ideas are developed as long as their benefit is greater than their cost. So, when the opportunity cost of time is lowered, such as during a holiday from work, more projects are developed, but they have a lower expected benefit. We develop a simple theoretical framework that allows innovators to choose the level of effort they apply towards the development of their idea in a context where the returns to effort are greater for higher quality ideas. We also allow for lower team coordination costs during periods when individuals have overlapping slack time. Under these conditions, slack time may lead to not only lower but also higher quality projects. We test the model's predictions using data on 165,410 projects posted on Kickstarter during college breaks. Consistent with the model's predictions, during university breaks more projects are posted and the increase is largest for projects of either very high or very low quality. Furthermore, projects posted during breaks are more complex, with larger teams and more diverse skills.
Keywords: crowdfunding, entrepreneurship, slack time, internet
JEL Classification: L26, O31, J22
Suggested Citation: Suggested Citation
Agrawal, Ajay and Catalini, Christian and Goldfarb, Avi and Luo, Hong, Slack Time and Innovation (December 30, 2016). Rotman School of Management Working Paper No. 2599004. Available at SSRN: https://ssrn.com/abstract=2599004 or http://dx.doi.org/10.2139/ssrn.2599004