|Faculty Speaker||Professor Soo-Haeng Cho [Carnegie Mellon University]|
|Title||Innovation Tournaments with Multiple Contributors|
|Date & Time||Friday, September 27, 2013 at 10:30am|
|Place||UCLA Anderson School of Management
We examine an innovation tournament in which an organizer seeks solutions to an innovation-related problem from a number of independent agents. We call an agent whose ex-post output contributes to the organizer's utility a contributor, and consider a general case in which the organizer seeks any number of contributors. We show that a winner-takes-all award scheme is optimal to the tournament organizer for a large class (but not all) of distributions for agents' uncertain outputs. Finally, we demonstrate that the organizer should compensate agents based on their relative ranks by awarding either a fixed prize or a performance-contingent prize only if the number of contributors is small or the uncertainty in agents' outputs is low; otherwise, the organizer is better off by awarding agents based only on their own outputs (i.e., absolute performance) similarly to individual contracts.