Experimentation, Learning, and Preemption

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.