Seminar

Contests for Experimentation

Marina Halac (University of Columbia)

November 13, 2014, 11:00–12:30

Toulouse

Room MS 001

Economic Theory Seminar

Abstract

We study the design of contests for specific innovations when there is learning: contestants’ beliefs dynamically evolve about both the innovation’s feasibility and opponents’ success. Our model builds on exponential-bandit experimentation. We characterize contests that maximize the probability of innovation when the designer chooses how to allocate a prize and what information to disclose over time about contestants’ successes. A “public winner-takes-all contest” dominates public contests—those where any success is immediately disclosed—with any other prize-sharing scheme as well as winner-takes-all contests with any other disclosure policy. Yet, it is often optimal to use a “hidden equal-sharing contest”. With Navin Kartik and Qingmin Liu