Experimentation, Learning, and Preemption

58 Pages Posted: 6 Feb 2019 Last revised: 16 Aug 2019

See all articles by Heidrun C. Hoppe-Wewetzer

Heidrun C. Hoppe-Wewetzer

University of Hannover - Department of Economics; and CEPR

Georgios Katsenos

University of Hannover - Department of Economics

Emre Ozdenoren

London Business School; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: January 23, 2019

Abstract

We offer a model of experimentation and learning with uncertain outcomes, and show that competition leads to less experimentation, extending results for preemption games to experimentation with uncertain outcomes. We compare experimentation under two information settings: when the researchers share vs. keep private the information about the outcomes of their experiments. We discover that information sharing can generate more experimentation and higher welfare when uncertainty about the feasibility of a breakthrough is large; breakthroughs are rare even when they are feasible; and experiments frequently fail to produce results. Our results shed light on recent criticism of the scientific system.

Suggested Citation

Hoppe-Wewetzer, Heidrun C. and Katsenos, Georgios and Ozdenoren, Emre, Experimentation, Learning, and Preemption (January 23, 2019). Available at SSRN: https://ssrn.com/abstract=3321231 or http://dx.doi.org/10.2139/ssrn.3321231

Heidrun C. Hoppe-Wewetzer

University of Hannover - Department of Economics; and CEPR ( email )

Koenigsworther Platz 1
30167 Hannover
Germany

HOME PAGE: http://www.mik.uni-hannover.de

Georgios Katsenos

University of Hannover - Department of Economics ( email )

Koenigsworther Platz 1
Hannover, 30167
Germany

Emre Ozdenoren (Contact Author)

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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