Incentives in Basic Research

47 Pages Posted: 7 Sep 2000 Last revised: 18 Nov 2022

See all articles by Edward P. Lazear

Edward P. Lazear

Stanford Graduate School of Business; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Date Written: January 1996

Abstract

Individuals involved in basic research, like other workers, respond to incentives. Funding agencies provide implicit incentives when they specify the rules by which awards are made. The following analysis is an exercise in understanding incentives at an applied level. Specific rules are examined and analyzed to determine their incentive effects. For example, what is the effect of rewarding past effort? What happens when a few large awards are replaced by many small awards? How does the timing of an award affect effort? How does an agency choose which topics to fund? After having mapped out the responses of researchers to rules, socially optimal rules are derived. Research incentive issues have private business analogues, and the extension to the operation of the firm is discussed briefly.

Suggested Citation

Lazear, Edward P., Incentives in Basic Research (January 1996). NBER Working Paper No. w5444, Available at SSRN: https://ssrn.com/abstract=225501

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