Ashoka University is a private university located in Sonipat, Haryana, India, focusing on liberal arts and sciences. It was established in 2014.&nbsp;It is guided by an academic council of academics and scholars from around the world. The council sets the university&#39;s academic standard, advising on matters of curriculum, faculty hiring and research.&nbsp;

Ashoka University offers a full-time 3 (+ 1) year undergraduate programme. The University comprises of&nbsp;2500 plus students, with a mix of both national and international students.&nbsp; &nbsp;

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Ashoka University

Outsourcing of research is commonly observed in knowledge-intensive industries such as biotech. We model innovation as an ambiguous stochastic process with dynamically consistent updating. We assume that the research labs are less ambiguity averse than the commercial firms. We characterize the optimal sequence of short-term contracts governing innovation, and show how it facilitates ambiguity-sharing. This ambiguity sharing agreement mitigates the dynamic moral hazard problem, resulting in monotonically decreasing investment and preventing equilibrium delay. Compared to an ambiguity-neutral policymaker's benchmark, the research alliances stop experimenting too early, and may liquidate the project even after being patented. The problems are structural, redesigned patent laws cannot solve both of these problems.

Department of Economics

Fulltext

Games and Economic Behavior

Dynamic contracting for innovation under ambiguity

This paper explores how delegation can be used as a signal to sustain cooperation. I consider a static principal-agent model with two tasks, one resembling a coordination game. If there is asymmetric information about the agent's type, the principal with high private belief can delegate the first task as a signal. This is also supported by the forward induction argument. However, in the laboratory setting, this equilibrium is chosen only sometimes. When the subjects have information about past sessions, there is a significant increase in the use of delegation. This finding sheds light on equilibrium selection in Bayesian games.