This project studies innovation contests in which a contest organizer seeks one or multiple solutions to an innovation-related problem from a number of independent agents, and awards the best solution(s). While agents exert efforts to improve their solutions, the quality of their solutions may be subject to their ability levels and the uncertainty they face during the innovation and evaluation processes. In this project, we generate managerial insights on how to execute contests, and describe how the execution of contests depends on the organizer’s objectives, the number of solutions that the organizer seeks, and agent’s ability and uncertainty levels.
This project contributes to our understanding of the relatively understudied area of innovation contests, and offers key managerial insights to practitioners. With the advancement in information technology and global access to skilled individuals, innovation contests have emerged as a novel approach for governments, non-proft organizations, and companies to find innovative solutions to challenging problems as diverse as design, software development, and health science. The total amount of awards in contests has reached $1 to 2 billion in 2009 with a growth rate exceeding 18%. Thus, optimal execution of contests can add significant value to the global society and businesses.