This research examines, in the laboratory, a class of game-theoreti c equilibrium models of private research and development (R&D). The authors formulate a stochastic model of R&D investment whose predicti ons can be examined by using laboratory experiments. The noncooperati ve Nash equilibrium of their operational model yields testable predictions about the effects of appropriability and market structure on R&D. The experimental results support the hypothesis that the degree of appropriability is inversely related to R&D spending. The results strongly support the hypothesis that an increase in group size yields greater aggregate R&D. The noncooperative Nash equilibrium is shown to be a good predictor of central tendencies in the experiments. Copyright 1988, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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