We study a setting in which one or two agents conduct research on behalf of a principal. The agents' success depends on … effort and the choice of a research technology that is uncertain with respect to its quality. A single agent has no incentive … this bias towards mainstream research always entails an efficiency loss if researchers are risk-averse. Our results suggest …

The real option theory provides a useful tool to evaluate an R&D investment under uncertainty because, unlike the NPV …. -- American Exchange options ; game theory ; Montecarlo simulation ; R&D ; information revelation …

We develop a theory of incentives, wages, and employment in the context of team production. A central insight is that …