Slack Time and Innovation

49 Pages Posted: 27 Apr 2015 Last revised: 30 Dec 2016

Ajay Agrawal

University of Toronto - Rotman School of Management; National Bureau of Economic Research (NBER)

Christian Catalini

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Avi Goldfarb

University of Toronto - Rotman School of Management

Hong Luo

Harvard Business School - Strategy Unit

Multiple version iconThere are 2 versions of this paper

Date Written: December 30, 2016

Abstract

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

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

Ajay Agrawal

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6
Canada

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Christian Catalini (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-480
Cambridge, MA MA 02142
United States

HOME PAGE: http://mitsloan.mit.edu/faculty-and-research/faculty-directory/detail/?id=58777

Avi Goldfarb

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6
Canada
416-946-8604 (Phone)
416-978-5433 (Fax)

Hong Luo

Harvard Business School - Strategy Unit ( email )

Harvard Business School
Soldiers Field Road
Boston, MA 02163
United States

Paper statistics

Downloads
408
Rank
54,649
Abstract Views
2,711