Collaborative Research: Studies of Innovation and Information

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This proposal consists of two distinct projects. The first project will study theoretically the effects of various antitrust policies and industries that are characterized by high rate of innovation and "winner-take-all" competition. This issue is not well understood, as antitrust analysis has traditionally not focused on issues of innovation. Yet such concerns form an increasingly important aspect of antitrust policy. Recent antitrust cases focus on precisely this issue. An excellent example is the recent U.S. versus Microsoft case, in which distinguished economists were fundamentally in disagreement about the effects of antitrust enforcement on innovation and future productivity of the industry.The second project will study the ways in which information exchange among individuals engaged in a group decision-making process change when the individuals providing information have preferences and motives that are unobservable to the other members of the group. This kind of unobservable bias is present in many real world decision-making situations. However, the effects of this bias on the kind of decision that are reached and the implications for how to optimally structure decision-making are not well understood by economists.The broader impacts of the first project will extend to improving antitrust policy in a crucial sector of the American economy. The broader impacts of the second project will come from designing better decision-making procedures for real world organizations.