Performance Feedback in Competitive Product Development

72 Pages Posted: 28 Jul 2015 Last revised: 6 Feb 2019

See all articles by Daniel P. Gross

Daniel P. Gross

Harvard Business School; National Bureau of Economic Research

Date Written: October 24, 2016

Abstract

Performance feedback is ubiquitous in competitive settings where new products are developed. This article introduces a fundamental tension between incentives and improvement in the provision of feedback. Using a sample of four thousand commercial logo design tournaments, I show that feedback reduces participation but improves the quality of subsequent submissions, with an ambiguous effect on high-quality output. To evaluate this tradeoff, I develop a procedure to estimate agents' effort costs and simulate counterfactuals under alternative feedback policies. The results suggest that feedback on net increases the number of high-quality ideas produced and is thus desirable for a principal seeking innovation.

Keywords: Feedback; Evaluation; Learning; Tournaments; Innovation

JEL Classification: C51, C57, D82, D83, M55, O31, O32

Suggested Citation

Gross, Daniel P., Performance Feedback in Competitive Product Development (October 24, 2016). RAND Journal of Economics, Vol. 48, No. 2, Summer 2017; Harvard Business School Research Paper No. 16-110. Available at SSRN: https://ssrn.com/abstract=2636319 or http://dx.doi.org/10.2139/ssrn.2636319

Daniel P. Gross (Contact Author)

Harvard Business School ( email )

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

National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
133
Abstract Views
1,019
rank
220,429
PlumX Metrics