Strategic Disclosure in Research Races

Abstract

We study a research race between two players. Each player works on an identical two-step project. To work on step 2, a player must complete step 1. Each step is completed with a discovery. Once a discovery is made, a player decides whether and when to disclose it. Disclosure of an intermediate discovery gives an immediate reward to the player, but it also allows the opponent to copy it and compete for a final reward from the final discovery. We show that a higher final reward has a U-shaped effect on when the intermediate finding is disclosed and when the final finding is discovered: A higher final reward speeds up both if and only if the final reward is low.

Keywords: Research races, strategic disclosure

JEL Classification: D83, O31