Uncertainty and Individual Discretion in Allocating Research Funds

39 Pages Posted: 7 Aug 2017 Last revised: 14 Aug 2020

See all articles by Anna Goldstein

Anna Goldstein

Prime Coalition

Michael Kearney

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: August 7, 2017

Abstract

There is a long-standing tradition in public research funding agencies of distributing funds via peer review, which aggregates evaluations of proposed research ideas from a group of external experts. Despite complaints that this process is biased against novel ideas, there is poor understanding of an alternative system that may overcome this bias: the use of individual discretion. Here, we conduct the first quantitative study of how individual discretion affects a research funding portfolio. Using internal project selection data from the Advanced Research Projects Agency-Energy (ARPA-E), we describe how a portfolio of projects selected by individual discretion differs from a portfolio of projects selected by traditional peer review. We show that ARPA-E program directors prefer to fund proposals with greater disagreement among experts, especially if at least one reviewer thinks highly of the proposal. This preference leads ARPA-E to fund more uncertain and creative research ideas, which supports the agency’s mission of pursuing novel ideas for transformational energy technology.

Keywords: research funding, project selection, peer review, uncertainty, innovation

Suggested Citation

Goldstein, Anna and Kearney, Michael, Uncertainty and Individual Discretion in Allocating Research Funds (August 7, 2017). Available at SSRN: https://ssrn.com/abstract=3012169 or http://dx.doi.org/10.2139/ssrn.3012169

Michael Kearney

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

77 Massachusetts Ave. E62-663
Cambridge, MA 02142
United States

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