UCL School of Management is delighted to welcome Gizem Korpeoglu to host a research seminar discussing: ‘Optimal Duration of Innovation Contests’
This paper studies the optimal duration and the optimal award scheme of an innovation contest where an organizer elicits solutions to an innovation-related problem from a group of agents. Each agent can improve her solution by exerting costly effort but the quality of her solution also depends on an output uncertainty. We show, consistent with recent empirical evidence, that the optimal contest duration and the optimal total award are positively correlated. This is because both the optimal contest duration and the optimal total award increase with the agent’s output uncertainty and decrease with the marginal impact of the agent’s effort on the quality of her solution. A managerial insight from this result is that the optimal contest duration may increase with the novelty and the sophistication of solutions that the organizer seeks. More interestingly, we show that it is optimal for the organizer to give multiple awards when the organizer has low urgency in obtaining solutions. This result may explain why many contests on platforms give multiple awards.