Markets for Ideas: Prize Structure, Entry Limits, and the Design of Ideation Contests

41 Pages Posted: 17 Aug 2019 Last revised: 13 Sep 2019

Date Written: August 13, 2019

Abstract

I develop an empirical model of idea generation contests with heterogeneous participants and endogenous entry, fit the model to data from a platform used by major advertisers, and simulate counterfactual contest designs. The empirical model resolves ambiguous predictions yielded by contest theory about the effects of different prize structures on contest outcomes. Simulations reveal the impact of strategies that hold fixed total award and balance competition by handicapping advantaged participants. Increasing the number of prizes while restricting the number of prizes per participant can improve outcomes for the platform. The results provide guidance for the design of large contests.

Keywords: contest design, incentives, innovation, advertising, idea generation, heterogeneity, entry, structural estimation, partial identification

JEL Classification: C51, C57, D82, L86, M31, M37, M55, O31

Suggested Citation

Kireyev, Pavel, Markets for Ideas: Prize Structure, Entry Limits, and the Design of Ideation Contests (August 13, 2019). RAND Journal of Economics, Forthcoming; INSEAD Working Paper No. 2019/40/MKT. Available at SSRN: https://ssrn.com/abstract=3437372 or http://dx.doi.org/10.2139/ssrn.3437372

Pavel Kireyev (Contact Author)

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

HOME PAGE: http://www.pavelkireyev.com

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