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Institute of Economics

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  7. Lecture by Prof. Dr. Catherine Roux, University Basel, at the BERG Research Seminar on the 16th of June

Lecture by Prof. Dr. Catherine Roux, University Basel, at the BERG Research Seminar on the 16th of June

We are pleased to announce that Prof. Dr. Catherine Roux, University Basel, will give a lecture within the BERG-Research Seminar on the topic of

Procuring New Ideas: On the Value of Performance Information in Innovation Tournaments

The date is Tuesday, 16th of June, 3 p.m., in room F21/01.30.

Abstract

We use a stylized model of a dynamic innovation tournament to show that the effectiveness of monetary incentives depends on whether contestants receive cardinal, ordinal, or no information about their rival's performance. The model's main implication is that performance information acts as a substitute for prize money in creating incentives to invest in new ideas: The investment-maximizing information policy switches from no to ordinal to cardinal information as the tournament's prize is reduced. A laboratory experiment provides support for our theory but also unveils an unpredicted pattern of behavior capable of overturning the model's conclusions concerning optimal policy.