Using Auctions to Reward Tournament Winners: Theory and Experimental Investigations

Posted: 21 Jan 2002

See all articles by Richard L. Fullerton

Richard L. Fullerton

U.S. Air Force Academy - Department of Economics & Geography

Bruce G. Linster

Government of the United States of America - Department of Economics & Geography

Michael McKee

affiliation not provided to SSRN

Stephen Slate

Government of the United States of America - Department of Economics & Geography

Abstract

This article explores theoretical and experimental implications of using auctions to reward winners of research tournaments. This process is a hybrid of the research tournament for a prize and a first-price auction held after the research is complete. The bids in the auction consist of a vector of both quality of the innovation and price. The experimental evidence supports the hypothesis that conducting auctions at the end of research tournaments will generally reduce the sponsor's prize expenditure relative to fixed-prize research tournaments. The potential importance of these results to the U.S. Department of Defense acquisition process is emphasized.

Suggested Citation

Fullerton, Richard L. and Linster, Bruce G. and McKee, Michael and Slate, Stephen, Using Auctions to Reward Tournament Winners: Theory and Experimental Investigations. Available at SSRN: https://ssrn.com/abstract=294545

Richard L. Fullerton (Contact Author)

U.S. Air Force Academy - Department of Economics & Geography ( email )

2354 Fairchild Dr
6K110
Air Force Academy, CO 80840-6299
United States

Bruce G. Linster

Government of the United States of America - Department of Economics & Geography ( email )

2354 Fairchild Dr
6K110
Air Force Academy, CO 80840-6299
United States
719-333-3080 (Phone)
719-333-7137 (Fax)

Michael McKee

affiliation not provided to SSRN

Stephen Slate

Government of the United States of America - Department of Economics & Geography ( email )

2354 Fairchild Dr
6K110
Air Force Academy, CO 80840-6299
United States

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