The Effects of Rivalry and Information Exchange on Scientific Progress

Abstract

We offer a model of scientific progress in which uncertainty is resolved
over time. We show that rivalry 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. they 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 produce results infrequently. Our results shed light on
recent criticism of the science system.

Keywords: Stopping game, experimentation, learning, preemption, multiarmed bandit problem

JEL Classification: D83, O31