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Incentives in Contests with Heterogeneous Solvers

Körpeoğlu, E; Cho, SH; (2017) Incentives in Contests with Heterogeneous Solvers. Management Science 10.1287/mnsc.2017.2738. (In press). Green open access

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Abstract

In a contest in which solvers with heterogeneous expertise exert effort to develop solutions, a recent paper [Terwiesch C, Xu Y (2008) Innovation contests, open innovation, and multiagent problem solving. Management Sci. 54(9):1529–1543] argues that as more solvers enter the contest, every solver will reduce effort due to a lower probability of winning the contest. This paper corrects mistakes in this theory, and shows that there exist high-expertise solvers who may raise their effort in response to increased competition. This is because more entrants raise the expected best performance among other solvers, creating positive incentives for solvers to exert higher effort to win the contest. Because of this positive effect, we find that a free-entry open contest is more likely to be optimal to a contest organizer than what Terwiesch and Xu (2008) and other prior literature asserted.

Type: Article
Title: Incentives in Contests with Heterogeneous Solvers
Open access status: An open access version is available from UCL Discovery
DOI: 10.1287/mnsc.2017.2738
Publisher version: http://dx.doi.org/10.1287/mnsc.2017.2738
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Open Innovation, Crowdsourcing, Expert-sourcing, Effort, Heterogeneity
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management
URI: https://discovery.ucl.ac.uk/id/eprint/1474391
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