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Contracting with Researchers

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  • Verbeck, Matthias

Abstract

We study a setting in which one or two agents conduct research on behalf of a principal. The agents binary performance level (suc- cess or failure) depends on their invested research e ort, and their choice of a research technology that is uncertain in respect of its apt- ness to generate a success. While in the single-agent-setting the agent has no incentive to deviate from the principal s preferred technology choice, this is not generally true for the multiagent-setting. When technologies are mutually exclusive - only one of them will be suit- able for yielding a high output - we show that there exists a contract that aligns the principal s and the agents interests. However, under the plausible assumption of scientists free technology choice, our re- sults suggest that there is a bias towards mainstream-research: Agents choose promising technologies more often than socially optimal.

Suggested Citation

  • Verbeck, Matthias, 2015. "Contracting with Researchers," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112963, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc15:112963
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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