The effects of rivalry on scientific progress under public vs private learning

Hoppe-Wewetzer, H, Katsenos, G and Ozdenoren, E (2023) The effects of rivalry on scientific progress under public vs private learning. Journal of Economic Theory, 212. ISSN 0022-0531 (In Press)

Abstract

We offer a model of scientific progress in which uncertainty resolves over time. We show that rivalry leads to less experimentation, extending results for preemption games to experimentation with uncertain outcomes. We compare experimentation duration and welfare when experimental outcomes are publicly versus privately observable. We show that public learning can generate more experimentation and higher welfare when uncertainty about the feasibility of a breakthrough is large; breakthroughs are rare even when they are feasible; and experiments produce results infrequently. Our results shed light on recent criticism of the science system.