Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93822
Authors: 
Ding, Wei
Wolfstetter, Elmar G.
Year of Publication: 
2009
Series/Report no.: 
SFB/TR 15 Discussion Paper 262
Abstract: 
The literature on R&D contests implicitly assumes that contestants submit their innovation regardless of its value. This ignores a potential adverse selection problem. The present paper analyzes the procurement of innovations when the procurer cannot commit to never bargain with innovators who bypass the contest. We compare ?xed-prize tournaments with and without entry fees, and optimal scoring auctions with and without minimum score requirement. Our main result is that the optimal ?xed-prize tournament is more pro?table than the optimal auction since preventing bypass is more costly in the optimal auction.
Subjects: 
innovation
contests
tournaments
auctions
bargaining
adverse
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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