Dynamic incentives in innovation and experimentation Byunghoon Kim

Format:

Book

Thesis/Dissertation

Author/Creator:

Kim, Byunghoon, author.

Contributor:

University of Pennsylvania. Economics., degree granting institution.

Language:

English

Subjects (All):

Public policy.

0501.

0511.

0630.

Local Subjects:

Public policy.

0501.

0511.

0630.

Genre:

Academic theses

Physical Description:

1 online resource (140 pages)

Contained In:

Dissertations Abstracts International 87-12A

Place of Publication:

Ann Arbor : ProQuest Dissertations and Theses, 2026

Language Note:

English

Summary:

This dissertation consists of three chapters in microeconomic theory, focusing on innovation, experimentation, and incentives under asymmetric information. The first chapter develops a model of serial experimentation in which an entrepreneur sequentially experiments with different ideas until one succeeds. Because switching to a new idea is irreversible and requires investor funding, the timing of switching becomes a key strategic choice. Since creativity is not directly observable, investors infer it from switching behavior, which creates signaling distortions. The chapter shows that these distortions depend not only on market conditions but also on the technological environment, in particular creativity abundance and founder-specificity. In particular, when creativity is abundant, both types distort toward faster switching, while when creativity is scarce, the more creative type may distort toward slower switching and the less creative type toward faster switching. This chapter is joint work with Marcus Tomaino. The second chapter examines the strategic role of transparency in a winner-takes-all innovation race, where two firms compete to achieve three technological breakthroughs. At each stage of the race, firms choose their level of transparency, which affects the likelihood that their breakthroughs leak to competitors. The model shows that full transparency can arise in equilibrium early in the race, but transparency must decline as technological leads widen. When transparency enhances productivity, openness declines gradually as a firm's lead grows; when transparency affects only information diffusion, equilibrium transparency takes a bang-bang form, with firms choosing either full openness or full opacity. This chapter is joint work with Marcus Tomaino. The third chapter studies a dynamic principal-agent problem in which effort is observable, but failure after positive effort is especially informative about the agent's underlying suitability. In this environment, the threat of replacement can weaken rather than strengthen incentives, because visible effort followed by failure leads observers to update more sharply against the agent. I develop a Markov model in which equilibrium is characterized by threshold strategies, and show that replacement risk raises the agent's shirking cutoff relative to the benchmark without replacement concerns. The chapter further shows that full disclosure is optimal when credible disclosure is feasible, while deadline commitment can improve incentives when disclosure is not credible but commitment is possible. More broadly, it identifies a new form of moral hazard: signal jamming through shirking

Notes:

Source: Dissertations Abstracts International, Volume: 87-12, Section: A.

Advisors: Mailath, George; He, Kevin Committee members: Toikka, Juuso

Ph.D. University of Pennsylvania 2026

Vendor supplied data

Local Notes:

School code: 0175

ISBN:

9798247973812

Access Restriction:

Restricted for use by site license