| Abstract: |
In innovation contests, the progress of the competing firms in the innovation
process is usually their private information. We analyze an innovation contest
in which research firms have a stochastic technology to develop innovations at
a fixed cost, but their progress is publicly announced. We make a comparison
with the case of no information revelation: if the progress is disclosed, the
expected profit of the firms is higher, but the expected profit of the sponsor
is lower. Additionally, we show that firms may voluntarily reveal their
information. |