Essays on Innovation, Experimentation, and Discrimination

The first chapter of this thesis examines the strategic role of transparency in a 'winner-takes-all' innovation race, where two competing firms race to achieve three technological breakthroughs in order to obtain the innovation. At each stage of the race, firms decide on their level of transparency which moderates the likelihood of their technological breakthroughs leaking to their competitors. Our model reveals that full transparency can emerge as an equilibrium strategy during the early stages of the race, but also that transparency must decline as technological leads extend. This chapter is the result of joint work with Byunghoon Kim. This second chapter of this thesis develops a model of serial experimentation where an entrepreneur experiments with different ideas until one of them produces a success. A more creative entrepreneur both generates ideas faster and creates more profits when an idea succeeds. Since creativity is not directly observable, investors infer creativity from an entrepreneur’s timing of switching, creating an incentive for the entrepreneur to distort their behavior to influence these perceptions. This chapter is the result of joint work with Byunghoon Kim. The third and final chapter of this thesis explores the phenomenon of `inverting discrimination' in a hiring setting. In the model, workers, characterized by skill level and binary group membership, arrive sequentially into a market with a single firm who has a single productive slot and an exogenous preference for one of the two groups. With high-skilled workers, the firm always discriminates in the direction of its bias; however, with low-skilled workers, a counterintuitive incentive for the firm to discriminate against its bias can materialize in equilibrium. This results from the firm's bias being known: an incumbent from the favored group deters more high-skilled workers from applying in the future than does an incumbent from the unfavored group.

Author dc:creator

• Tomaino, Marcus, Vincent

Advisor dc:contributor.advisor

• Mailath, George

• Economics

Language dc:language.iso

en

Repository record dc:identifier.uri

https://repository.upenn.edu/handle/20.500.14332/60938

OAI identifier oai:identifier

oai:repository.upenn.edu:20.500.14332/60938