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Econ 483_Lecture 6_Prizes_Contests - P rizes Contests Ebay...

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Prizes Contests Ebay Lecture 6 Prizes & contests Econ 483: Economics of Innovation & Technology Evangelia Chalioti University of Illinois at Urbana-Champaign February 4, 2013 Lecture 6: Prizes & contests, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c ° All rights reserved. ,. ,. ,.
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Prizes Contests Ebay Outline of lecture Targeted & Blue-sky prizes Ideas & innovations Choosing among ideas Auction types: Ascending (English) auctions Descending (Dutch) auctions Vickrey (second-price) auctions Example: Ebay Lecture 6: Prizes & contests, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c ° All rights reserved. ,. ,. ,.
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Prizes Contests Ebay Ideas & innovations Lecture 6: Prizes & contests, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c ° All rights reserved. ,. ,. ,.
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Prizes Contests Ebay Ideas & innovations An innovation requires: an idea an investment To formulate the problem of IP protection, consider creative environments in which the incentive system operates. Lecture 6: Prizes & contests, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c ° All rights reserved. ,. ,. ,.
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Prizes Contests Ebay Ideas & innovations 2 types of creative environments: those where... - the creation of knowledge addresses a known need An incentive system to reward such ideas can be established ex-ante ) prizes: typically contingent on performance standards dictated by the need - the need had not been identi°ed prior to someone thinking of the idea; the idea is scarce An incentive system to reward scarce ideas must be established ex-post. The reward cannot be contingent on performance standards. Lecture 6: Prizes & contests, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c ° All rights reserved. ,. ,. ,.
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Prizes Contests Ebay Prizes Lecture 6: Prizes & contests, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c ° All rights reserved. ,. ,. ,.
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Prizes Contests Ebay Prizes Targeted prizes : are directed at well-known needs known to sponsors. are posted ex-ante. reward solutions to sponsor°s needs which are formalized in performance standards that must be met. Example: Prize of $30 million to develop a new "super e¢ cient refrigerator", 1992 ! Whirlpool won the contest but did not meet the performance standard (to sell 250,000 copies by 1997); the prize was not paid. Lecture 6: Prizes & contests, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c ° All rights reserved. ,. ,. ,.
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Prizes Contests Ebay Prizes - What happens if a scientist thinks of a great idea for which no reward has been posted? Blue-sky prizes ("The sky is the limit") : are o/ered for innovations that are not identi±ed in advance. are tailored ex-post to the value of the innovation. Lecture 6: Prizes & contests, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c ° All rights reserved. ,. ,. ,.
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Prizes Contests Ebay Prizes The advantage of prizes over patents: !
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