Exploration in Teams and the Encouragement Effect: Theory and Experimental Evidence

Emma von Essen, Marieke Huysentruyt, Topi Miettinen

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This paper analyzes a two-person, two-stage model of sequential exploration where both information and payoff externalities exist and tests the derived hypotheses in the laboratory. We theoretically show that, even when agents are self-interested and perfectly rational, the information externality induces an encouragement effect: a positive effect of first player exploration on the optimality of the second player exploring as well. When agents have other-regarding preferences and imperfectly optimize, the encouragement effect is strongest. The explorative nature of the game raises the expected surplus compared with a payoff equivalent public goods game. We empirically confirm our main theoretical predictions using a novel experimental paradigm. Our findings are relevant for motivating and managing groups and teams innovating not only for private but also and especially so, for public goods.
Original languageEnglish
Peer-reviewed scientific journalManagement Science
Pages (from-to)1-25
ISSN0025-1909
DOIs
Publication statusPublished - 22.05.2020
MoE publication typeA1 Journal article - refereed

Keywords

  • 511 Economics
  • behavior and behavioral decision making
  • game theory and bargaining theory
  • microeconomic behavior
  • firm objectives, organization and behavior
  • sequential

Sustainable Development Goals

  • GOAL 09: Industry, Innovation and Infrastructure

Areas of Strength and Areas of High Potential (AoS and AoHP)

  • AoS: Competition economics and service strategy - Quantitative consumer behaviour and competition economics

Fingerprint Dive into the research topics of 'Exploration in Teams and the Encouragement Effect: Theory and Experimental Evidence'. Together they form a unique fingerprint.

Cite this