Experimenting with Contests for Experimentation

25 Pages Posted: 12 May 2016 Last revised: 19 Oct 2016

See all articles by Cary A. Deck

Cary A. Deck

University of Alabama - Department of Economics, Finance and Legal Studies

Erik O. Kimbrough

Chapman University - The George L. Argyros School of Business & Economics

Date Written: October 12, 2016

Abstract

We report an experimental test of alternative rules in innovation contests when success may not be feasible and contestants may learn from each other. Following Halac et al. (forthcoming), the contest designer can vary the prize allocation rule from Winner-Take-All in which the first successful innovator receives the entire prize to Shared in which all successful innovators during the contest duration share in the prize. The designer can also vary the information disclosure policy from Public in which at each period, all information about contestants' past successes and failures is publicly available, to Private, in which contestants only know their own histories. In our setting, the optimal contest design in terms of maximizing the probability that at least one innovator is successful depends on the probability of successful innovation, given that innovation is feasible. Under some parameters the designer will prefer a WTA-Public contest; while, under others he will prefer Shared-Private. Our experiments provide evidence that Private disclosure contests behaviorally dominate Public disclosure, regardless of the prize allocation rule, and moreover that Shared-Private contests dominate WTA-Private contests.

Keywords: Research and Development, Innovation, Contests, Experiments

JEL Classification: C7, C9, D4, D7

Suggested Citation

Deck, Cary A. and Kimbrough, Erik O., Experimenting with Contests for Experimentation (October 12, 2016). Southern Economic Journal, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2778361 or http://dx.doi.org/10.2139/ssrn.2778361

Cary A. Deck

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States

Erik O. Kimbrough (Contact Author)

Chapman University - The George L. Argyros School of Business & Economics ( email )

One University Dr
Orange, CA 92866
United States

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