Idea Generation, Creativity, and Incentives

 
Idea Generation, Creativity, and Incentives
informs      ®
Vol. 25, No. 5, September–October 2006, pp. 411–425
issn 0732-2399  eissn 1526-548X  06  2505  0411                                                        doi 10.1287/mksc.1050.0166
                                                                                                                     © 2006 INFORMS

               Idea Generation, Creativity, and Incentives
                                                      Olivier Toubia
                Columbia Business School, Uris 522, 3022 Broadway, New York, New York 10027, ot2107@columbia.edu

      I  dea generation (ideation) is critical to the design and marketing of new products, to marketing strategy, and
         to the creation of effective advertising copy. However, there has been relatively little formal research on the
      underlying incentives with which to encourage participants to focus their energies on relevant and novel ideas.
      Several problems have been identified with traditional ideation methods. For example, participants often free
      ride on other participants’ efforts because rewards are typically based on the group-level output of ideation
      sessions.
         This paper examines whether carefully tailored ideation incentives can improve creative output. I begin by
      studying the influence of incentives on idea generation using a formal model of the ideation process. This
      model illustrates the effect of rewarding participants for their impact on the group and identifies a parameter
      that mediates this effect. I then develop a practical, web-based asynchronous “ideation game,” which allows the
      implementation and test of various incentive schemes. Using this system, I run two experiments that demon-
      strate that incentives do have the capability to improve idea generation, confirm the predictions from the
      theoretical analysis, and provide additional insight on the mechanisms of ideation.
      Key words: idea generation; new product research; product development; marketing research; agency theory;
        experimental economics; game theory
      History: This paper was received January 7, 2004, and was with the author 13 months for 2 revisions;
        processed by Arvind Rangaswamy.

1.    Introduction                                                  Kerr and Bruun 1983, Harkins and Petty 1982). This
Idea generation (ideation) is critical to the design and            suggests that idea generation could be improved by
marketing of new products, to marketing strategy,                   providing appropriate incentives to the participants.1
and to the creation of effective advertising copy. In               Surprisingly, agency theory appears to have paid lit-
new product development, for example, idea gener-                   tle attention to the influence of incentives on agents’
ation is a key component of the front end of the                    creative output.2 On the other hand, classic research
process, often called the “fuzzy front end” and recog-              in social psychology suggests that incentives might
nized as one of the highest leverage points for a firm               actually have a negative effect on ideation. For exam-
(Dahan and Hauser 2001).                                            ple, the Hull-Spence theory (Spence 1956) predicts an
   The best-known idea-generation methods have                      enhancing effect of rewards on performance in sim-
evolved from “brainstorming,” developed by Osborn                   ple tasks but a detrimental effect in complex tasks.
(1957) in the 1950s. However, dozens of studies have                The reason is that rewards increase indiscriminately
demonstrated that groups generating ideas using tra-                all response tendencies. If complex tasks are defined
ditional brainstorming are less effective than individ-             as tasks in which there is a predisposition to make
uals working alone (see Diehl and Stroebe 1987 or                   more errors than correct responses, then this pre-
Lamm and Trommsdorff 1973 for a review). Three                      disposition is amplified by rewards. Similarly, the
main reasons for this robust finding have been iden-                 social facilitation paradigm (Zajonc 1965) suggests
tified as production blocking, fear of evaluation, and               that insofar as incentives are a source of arousal,
free riding. The first two (which will be described in               they should enhance the emission of dominant, well-
more detail in §3) have been shown to be addressed                  learned responses but inhibit new responses, lead-
by Electronic Brainstorming (Nunamaker et al. 1987;                 ing people to perform well only at tasks with which
Gallupe et al. 1991, 1992; Dennis and Valacich 1993;
Valacich et al. 1994). However, free riding remains                 1
                                                                      Note that free riding is likely to be magnified as firms seek input
an issue. In particular, participants free ride on each             from customers (who typically do not have a strong interest in the
                                                                    firm’s success) at an increasingly early stage of the new product
other’s creative effort because the output of idea-                 development process (von Hippel and Katz 2002).
generation sessions is typically considered at the                  2
                                                                      Agency theory has been widely applied to other marketing topics
group level, and participants are not rewarded for                  such as channel coordination (e.g., Raju and Zhang 2005, Desiraju
their individual contributions (Williams et al. 1981,               2004, Jeuland and Shugan 1988, Moorthy 1987).

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412                                                                                        Marketing Science 25(5), pp. 411–425, © 2006 INFORMS

they are familiar. McCullers (1978, p. 14) points out                      If several streams of ideas have been established in
that incentives enhance performance when it relies                      an idea-generation session, a participant has a choice
on making “simple, routine, unchanging responses,”                      between contributing to one of the existing streams
but that the role of incentives is far less clear in sit-               and starting a new stream. If he or she decides to con-
uations that depend heavily on flexibility, conceptual                   tribute to an existing stream, he or she might have to
and perceptual openness, or creativity. McGraw (1978,                   choose between contributing to a longer more mature
p. 34) identifies two conditions under which incen-                      stream and a newer emerging one. For ease of exposi-
tives will have a detrimental effect on performance:                    tion, let us assume that each stream of ideas reflects a
“first, when the task is interesting enough for subjects                 different approach to the topic of the session.4 Then,
that the offer of incentives is a superfluous source of                  the problem faced by the participant can be viewed
motivation; second, when the solution to the task is                    equivalently as that of deciding which approach to
open-ended enough that the steps leading to a solu-                     follow in his or her search for new ideas.
tion are not immediately obvious.”                                         I assume that some approaches can be more fruit-
   In this paper, I examine whether carefully tailored                  ful than others and that the participant does not
ideation incentives can improve creative output. In §2,                 know a priori the value of each approach but rather
I study the influence of incentives on idea genera-                      learns it through experience. He or she then has
tion using a formal model of the ideation process.
                                                                        to fulfill two potentially contradictory goals: increas-
In §3, as a step toward implementing and testing
                                                                        ing short-term contribution by following an approach
the conclusions from §2, I present a practical, Web-
                                                                        that has already proven fruitful (exploitation) versus
based, asynchronous “ideation game,” which allows
                                                                        improving long-term contribution by investigating an
the implementation and test of various incentive
                                                                        approach on which little experience has been accumu-
schemes. In §4, I describe two experiments conducted
using this system. These experiments demonstrate                        lated so far (exploration). This problem is typical in
that incentives do have the capability to improve                       decision making and is well captured by a representa-
idea generation, confirm the predictions from the the-                   tion known as the multiarmed bandit model (Bellman
oretical analysis, and provide additional insight on                    1961).5 For simplicity, let us first restrict ourselves to a
the mechanisms of ideation. Section 5 mentions some                     two-armed bandit, representing a choice between two
managerial applications and §6 concludes.                               approaches: A and B. Let us assume that by spend-
                                                                        ing one unit of time thinking about the topic using
                                                                        approach A (respectively, B), a participant generates
2.    Theoretical Analysis
The goal of this section is to develop a theoreti-                      a relevant idea on the topic with unknown prob-
cal framework allowing the study of idea-generation                     ability pA (respectively, pB ). Participants hold some
incentives. One characteristic of ideas is that they                    beliefs on these probabilities, which are updated after
are usually not independent but rather build on                         each trial.6
each other to form streams of ideas. This is analo-                        For example, let us consider a participant gen-
gous to academic research in which papers build on                      erating ideas on “How to improve the impact of
each other, cite each other, and constitute streams of                  the United Nations Security Council?” (which was
research. Let us define the contribution of a stream of                  the topic used in Experiment 1). Let us assume
ideas as the moderator’s valuation for these ideas (for                 that the participant contemplates two approaches to
simplicity, I shall not distinguish between the mod-                    the problem: (1) a legal approach, which he or she
erator of the idea-generation session and his or her                    believes to be somewhat promising and (2) a mon-
client who uses and values the ideas). The expected                     etary approach (devising an incentive system that
contribution of a stream of ideas can be viewed as a
function of the number of ideas in that stream. Let                     ideas in that tree. One judge thought that there were diminishing
us assume that the expected contribution of a stream                    returns, while the other two indicated diminishing returns only
of n ideas is a nondecreasing, concave function of n,                   after the first couple of ideas.
such that each new idea has a nonnegative expected                      4
                                                                          This assumption is not crucial. We just need to assume that each
marginal contribution and such that there are dimin-                    stream of ideas has an intrinsic characteristic that influences the
ishing returns to new ideas within a stream. Note that                  likelihood that the participant will be able to contribute to it and
                                                                        that the participant learns about this characteristic by trying to con-
the analysis would generalize to the case of increas-
                                                                        tribute to the stream.
ing or inverted U-shaped returns. (This might char-                     5
                                                                          Bandit is a reference to gambling machines (slot machines) that
acterize situations in which the first few ideas in the
                                                                        are often called one-armed bandits. In a multiarmed bandit, the
stream build some foundations, allowing subsequent                      machine has multiple levers (arms), and the gambler can choose to
ideas to carry the greatest part of the contribution.)3                 pull any one of them at a time.
                                                                        6
                                                                          Starting a new stream of ideas can be viewed as a special case in
3
 The three judges in Experiment 1 were asked to plot the evolution      which a participant tries an approach that has not been successfully
of the contribution of a tree of ideas as a function of the number of   used yet.
Toubia: Idea Generation, Creativity, and Incentives
Marketing Science 25(5), pp. 411–425, © 2006 INFORMS                                                                                     413

forces countries to respect the decision of the council),             as the “worse-looking approach.”) I assume that the
which appears more uncertain but potentially more                     prior beliefs on pA and pB at the beginning of period 1
rewarding. The participant has to decide between                      are independent and such that pA ∼BetanAS nAF  and
an approach with a moderately high expected short-                    pB ∼BetanBS nBF , with nAS , nAF , nBS , nBF ≥ 1.8 The
term return with nonrisky long-term potential and                     corresponding expected probabilities of success are
an approach with a lower expected short-term return                   pA = EpA  = nAS /NA ; pB = EpB  = nBS /NB , where NA =
that is potentially more promising in the long term.                  nAS + nAF and NB = nBS + nBF . The variance of the
   The traditional tension between exploration and                    beliefs is inversely proportional to NA and NB .
exploitation is completed further by the assumption                      Two effects influence this model. First, if the uncer-
that ideas in a stream have a diminishing marginal                    tainty on the worse-looking approach is large enough
contribution. Let us complement the classical multi-                  compared to the uncertainty on the better-looking
armed bandit model by assuming that when N trials                     approach, it might be optimal to explore the worse-
of an approach have been made, a proportion p of                     looking approach in period 1 although it implies a
which were successful, then the next idea found using                 short-term loss. In particular, if the expected probabil-
this approach has an expected marginal contribution                   ity of success of the uncertain worse-looking approach
of p · N + 1 − p · N  , with 0 ≤  ≤ 1.                       is close enough to that of the more certain better-
   Some topics are more narrowly defined than oth-                     looking approach, a success with the worse-looking
ers. Mathematical problems or puzzles are an extreme                  approach in period 1 might lead to updated beliefs
example in which the definition of the problem is                      that will make this approach much more appealing
such that once a solution has been proposed, there                    than the currently better-looking one.9 Second, if the
is usually little to build upon. Such topics would                    number of trials (and successes) on the better-looking
be represented by a low value of . On the other                      approach gets large, this approach becomes overex-
hand, some problems considered in idea generation                     ploited (because of the decreasing marginal returns),
are more “open-ended” (trying to improve a product                    and it becomes more attractive to “diversify” and
or service) and are such that consecutive ideas refine                 choose the other approach: although the probability
and improve each other. Such situations correspond                    of success is lower, the contribution in case of success
to higher values of .7                                               is higher.10
   To analyze the tension in ideation, I first formally                   Propositions 1A, 1B, and 1C in the online appendix
characterize different strategies in idea generation.                 (available at http://mktsci.pubs.informs.org) formally
Next, I consider the simple incentive scheme con-                     identify the conditions under which exploration, ex-
sisting of rewarding participants based on their indi-                ploitation, or diversification should be used. In par-
vidual contributions and show that although it leads                  ticular, these propositions show that exploration is
to an optimal balance between the different strate-                   never optimal when  is small enough: at the same
gies when  is small enough, it does not when  is                    time as the participant would learn more about pA ,
large. For large , this suggests the need for incen-                 he or she would also heavily decrease the attrac-
tives that interest participants in the future of the                 tiveness of this approach. On the other hand, when
group’s output. Although such incentives allow align-
ing the objectives of the participants with those of                  8
                                                                        Because beta priors are conjugates for binomial likelihoods
the moderator of the session, they might lead to free                 (Gelman et al. 1995), the posterior beliefs at the end of period 1
riding. Avoiding free riding requires further tuning                  (used as priors at the beginning of period 2) are beta distributed
of the rewards and can be addressed by rewarding                      as well.
participants more precisely for the impact of their                   9
                                                                        For example, let us assume that the better-looking approach at the
contributions.                                                        beginning of period 1, B, has a very stable expected probability of
                                                                      success, which is around 0.61. By stable, we mean that it will be
                                                                      similar at the beginning of period 2 whether a success or failure
2.1. Strategies in Idea Generation
                                                                      is observed for this approach in period 1 NB is very large). Let
Let us consider a two-period model in which a single                  us assume that the worse-looking approach, A, has an expected
participant searches for ideas and study the conditions               probability of success of 0.60 at the beginning of period 1. How-
under which it is optimal to follow the approach that                 ever, a success with this approach would increase the posterior
has the higher versus the lower prior expected proba-                 probability to 0.67, while a failure would decrease this posterior
                                                                      probability to 0.50. (These probabilities would result from NA = 5,
bility of success. (For simplicity, I shall refer to the for-
                                                                      nAS = 3, nAF = 2.) Then, playing B in period 1 would lead to a total
mer as the “better-looking approach” and to the latter                expected contribution of 061 + 061 = 122 (ignoring discounting
                                                                      for simplicity). Playing A in period 1 would lead to an expected
7
  The parameter  could also depend on the preferences of the         total contribution of 060 + 060 ∗ 067 + 040 ∗ 061 = 125 (play A in
user(s) of the ideas. For example, the organizer of the session       period 2 iff it was successful in period 1), which is higher.
                                                                      10
might value many unrelated rough ideas (low ), or, alternatively,      The conflict between exploration and exploitation is typical in
value ideas that lead to a deeper understanding of certain concepts   the multiarmed bandit literature. However, diversification typically
(high ).                                                             does not arise because of the assumption of constant returns.
Toubia: Idea Generation, Creativity, and Incentives
414                                                                                         Marketing Science 25(5), pp. 411–425, © 2006 INFORMS

 is large enough and if A is uncertain enough com-                          Proposition 2. For all NA , NB , there exists ∗ such
pared to B, the exploration of A might be optimal in                      that 0 <  < ∗ ⇒ for all pA , pB such that pA < pB and pA
period 1. Exploration is characterized by a short-term                    is close enough to pB , if participants are rewarded based on
loss (smaller expected contribution from period 1)                        their own contributions then a strategy x y is played in
incurred to increase long-term contribution (larger                       period 1 in an SPE of the game iff it is socially optimal.
expected contribution from the two periods).
                                                                          2.4. High- Case (Slowly Decreasing Returns)
2.2.   Rewarding Participants for Their Individual                        When  is close to 1, there are situations in which
       Contributions                                                      exploration is optimal for the group. However, explo-
Consider the incentive scheme that rewards partici-                       ration results in a short-term loss suffered only by the
pants based on their individual contributions. In prac-                   explorer and a potential long-term benefit enjoyed by
tice, this could be operationalized by having an exter-                   the whole group. There are some cases in which it is
nal judge rate each idea sequentially, and rewarding                      socially optimal that at least one player explores in
each participant based on the ratings of his or her                       period 1, but no player will do so in any SPE of the
                                                                          game. This is illustrated by the following proposition
ideas. This scheme is probably among the first ones
                                                                          when  is equal to 1.
that come to mind and addresses the free-riding issue
mentioned in the Introduction.                                               Proposition 3. If  = 1, then for all pB , for all pA < pB
   Let us introduce a second participant into the model.                  close enough to pB , there exists NA low < NA high Vlow <
Assume that, at each period, both players simultane-                      Vhigh ) such that if NB is large enough VarpB ) low
ously choose one of the two approaches. At the end of                     enough), then
period 1, the outcomes of both players’ searches are                         • NA < NA high VarpA  > Vlow ) implies that it is not
observed by both players, and players update their                        socially optimal for both players to choose B in period 1 (at
beliefs on pA and pB . Each player’s payoff is propor-                    least one player should explore).
tional to his or her individual contribution, i.e., to the                   • NA low < NA < NA high Vlow < VarpA  < Vhigh ) im-
sum of the contributions of his or her ideas from the                     plies that both players choose B in period 1 in any SPE of
two periods. The contribution of the group is equal                       the game (no player actually explores).
to the sum of the contributions of each player. Note
that  applies equally for both players, such that if                     2.5.   Interesting Participants in the Future of the
a player finds an idea using a certain approach, the                              Group’s Output by Rewarding Them for
marginal return on this approach is equally decreased                            Their Impact.
                                                                          Proposition 3 demonstrates a potential misalign-
for both participants.11
                                                                          ment problem when building on ideas matters; that
   Let us consider the subgame-perfect equilibrium
                                                                          is, when the marginal returns to subsequent ideas
(SPE) of the game played by the participants, as
                                                                          are high. To overcome this problem, participants
well as the socially optimal strategy, i.e., the strategy
                                                                          should be forced to internalize the effect of their
that maximizes the total expected contribution of the
                                                                          present actions on the future of the other partic-
group.
                                                                          ipants’ contribution. To study the dynamic nature
                                                                          of the incentives implied by this observation, let us
2.3. Low- Case (Rapidly Decreasing Returns)
                                                                          consider a more general framework, with an infi-
When  is low, the socially optimal strategy is
                                                                          nite horizon, N participants, and a per-period dis-
always to choose the approach with the highest short-                     count factor . Assume that participant i’s output
term expected contribution. Consequently, actions                         from period t, yit , has a probability density func-
that are optimal for self-interested participants trying                  tion f yit  x1t    xNt yj j=1  N =1  t−1 , where xj
to maximize their own contributions are also opti-                        is participant j’s action in period , and that par-
mal for the group. This is captured by the follow-                        ticipant i’s contribution from period t is Cit =
ing proposition (see the technical appendix at http://                    Cyj j=1  N =1  t . The two-armed bandit model
mktsci.pubs.informs.org for the proofs to Propositions                    considered earlier is a special case of this general
2–4).                                                                     model.
                                                                             Interesting participants in the group’s future out-
11
  The assumption that players independently choose which                  put allows aligning the incentives, but it might also
approach to follow and then share the output of their searches is         lead to free riding (Holmstrom 1982, Wu et al. 2004).
probably more descriptive of electronic ideation sessions (in which       The technical appendix to this paper that is avail-
participants are seated at different terminals from which they type
                                                                          able at http://mktsci.pubs.informs.org illustrates this
in their new ideas and read the other participants’ ideas) than it is
of traditional face-to-face sessions. As will be seen later, electronic   fact by considering the incentive scheme that consists
sessions have been shown to be more effective than face-to-face           of rewarding a participant for his or her action in
sessions (Gallupe et al. 1991, Nunamaker et al. 1987).                    period t according to a weighted average between his
Toubia: Idea Generation, Creativity, and Incentives
Marketing Science 25(5), pp. 411–425, © 2006 INFORMS                                                                                            415

or her contribution in period t and the other partic-                               At least three issues arise when trying to test these
ipants’ contribution in period t + 1 and by showing                              predictions experimentally. The first is a measure-
that it is, in fact, equivalent to a proportional sharing                        ment issue. Impact, in particular, can be very hard to
rule. Although the objective function of the partici-                            measure. The next section will address this issue by
pants is proportional to that of the moderator under                             proposing an idea generation system that allows mea-
such a scheme, it is possible for a participant to be                            suring (albeit not perfectly) the impact of each partic-
paid without participating in the search. This imposes                           ipant. Second, the model assumes that all participants
a cost on the moderator, because the rewards given to                            search for ideas at each period. Hence, the different
participants have to be high enough, so that each par-                           incentive schemes should be compared holding par-
ticipant is willing to search for ideas in each period.12                        ticipation constant. Third, the optimal relative weight
   To address free riding while still aligning the objec-                        on individual contribution versus impact depends on
tives, one option is to reward each participant more                             the scale of their measurements.14 Being unable to
precisely for that part of the group’s future contri-                            experimentally compare the scheme rewarding indi-
bution that depends directly on his or her actions,                              vidual contribution to the “optimal” scheme, I only
i.e., for his or her impact on the group. In particular,                         consider rewarding participants based on their indi-
the following proposition considers rewarding partic-                            vidual contributions or on their impact. The theory
ipant i for his or her action in period t based on the                           is silent regarding the relative contribution achieved
average between his or her contribution in period t                              by these two extreme reward schemes. However, it
and the impact of this action on the group’s future                              suggests that rewarding participants based on their
contribution. Under such a scheme, the objectives of                             impact will increase the amount of exploration in the
the participants are aligned with that of the modera-                            session. It also suggests that increasing the amount
tor, and free riding is reduced because a participant                            of exploration will be more beneficial if the marginal
does not get rewarded for the other participants’ con-                           contribution of ideas building on each other is slowly
tribution unless it is tied to his or her own actions.                           diminishing. These predictions can be summarized by
This reduces the share of the created value that needs                           the following two hypotheses.
to be redistributed to the participants.13
                                                                                    Hypothesis 1. The amount of exploration in the ses-
   Proposition 4. Rewarding each participant for the                             sion is higher if participants are rewarded for their impact
average between his or her contribution and his or her                           than it is if they are rewarded for their individual contri-
impact aligns the objectives of the participants with those                      butions.
of the moderator and is such that the total expected payoffs                       Hypothesis 2. Increasing the amount of exploration is
distributed in the session are lower than under a propor-                        more beneficial if the marginal contribution of ideas build-
tional sharing rule.                                                             ing on each other is slowly diminishing.
2.6. Summary of This Section.
This section studied incentive schemes rewarding par-                            3.     An Ideation Game
ticipants for a weighted average between their indi-                             I now describe an incentive-compatible “ideation
vidual contributions and their impact on the group.                              game” that allows testing and implementing the
Proposition 4 showed that such a scheme can always                               insights derived in §2. In this game, participants
lead to optimal search by the participants while                                 score points for their ideas, the scoring scheme being
addressing free riding. Propositions 2 and 3 studied a                           adjustable to reward individual contribution, impact,
special case in which the weight on impact is null. A                            or a weighted average of the two. The design of the
key parameter of the model is the speed with which                               game is based on the idea generation, bibliometric,
the marginal contribution of successive ideas building                           and contract theory literatures. Table 1 provides a
on each other decreases. Unless marginal contribution                            summary of the requirements imposed on the system
decreases very quickly, rewarding participants based                             and how they were addressed.
solely on their individual contributions leads to insuf-
ficient exploration.                                                              3.1.  Addressing “Fear of Evaluation” and
                                                                                       “Production Blocking”
12                                                                               Although the primary requirement imposed on this
  I assume that the moderator’s valuation for the ideas is high
enough that it is possible and optimal for him or her to induce the              idea-generation system is to allow implementing and
participants to search in each period.
13                                                                               14
  The impact of participant i’s action in period t is defined here as               For example, a theoretical prediction that the same weight should
+                 
  =t+1 
         −t
             t  j =i Cj − Cj i t, where Cj i t is the expected    be put on impact and individual contribution does not imply that
value of Cj obtained when yit is null and all players maximize                  this should be the case in the ideation game proposed in §3, because
the group’s expected output at each period,  is a discount factor,              individual contribution and impact are measured on different scales
                                                     
and t  = t · 1 − / −   is such that −1    t=1 t  = 1 for all   (the contribution of one idea is not assumed to be equivalent to the
t and .                                                                         impact implied by one citation).
Toubia: Idea Generation, Creativity, and Incentives
416                                                                                   Marketing Science 25(5), pp. 411–425, © 2006 INFORMS

   Table 1    Ideation Game—Requirements and Corresponding          adapts the concept of citation count from the field of
              Solutions                                             scientific publications (which are the focus of bibliom-
   Requirement                            Proposed solution         etry) to idea generation. An example is provided in
                                                                    Figure 1. Ideas are organized into “trees” such that the
   Address “production blocking”      Asynchronous                  “son” of an idea appears below it, in a different color,
   Address “fear of evaluation”       Anonymous                     and with a different indentation (one level further to
                                      Objective measures
                                      Mutual monitoring
                                                                    the right). The relation between a “father-idea” and
   Measure contribution and impact    Ideas structured into trees
                                                                    a “son-idea” is that the son-idea builds on its father-
   Prevent cheating                   Relational contract
                                                                    idea. More precisely, when a participant enters a new
                                      Mutual monitoring             idea, he or she has the option to place it at the top of
                                                                    a new tree (by selecting “enter an idea not building
                                                                    on any previous idea”) or to build on an existing idea
testing the incentive schemes treated in §2, it should              (by entering the identification number of the father-
also be compatible with the existing literature on idea             idea and clicking on “build on/react to idea #:”). Note
generation. In particular, two main issues have been                that an idea can have more than one “son” but at
identified with classical (face-to-face) idea-generation             most one “father” (the investigation of more complex
sessions, in addition to free riding (Diehl and Stroebe             graph structures allowing multiple fathers is left for
1987). The first one, “production blocking,” happens                 future research). The assignment of a father-idea to
with classical idea-generation sessions when partic-                a new idea is left to the author of the new idea (see
ipants are unable to express themselves simultane-                  below how incentives are given to make the correct
ously. The second one, “fear of evaluation,” corre-                 assignment).
sponds to the fear of negative evaluation by the other                 If a participant decides to build on an idea, a
participants, the moderator, or external judges.                    menu of “conjunctive phrases” (e.g., “More precisely,”
   These two issues have been shown to be reduced                   “On the other hand,” “However   ”) is offered to
by electronic idea-generation sessions (Nunamaker et                him or her (a blank option is also available) to
al. 1987; Gallupe et al. 1991, 1992; Dennis and Valacich            facilitate the articulation of the links between ideas.
1993; Valacich et al. 1994) in which participation is               Pretests suggested that these phrases were useful to
asynchronous (therefore reducing production block-                  the participants.
ing) and in which the participants are anonymous                       With this structure, the impact of an idea y can
(therefore reducing fear of evaluation). More precisely,            be measured by considering the ideas that are lower
in a typical electronic brainstorming session, each par-            than y in the same tree. In the experiments described
ticipant is seated at a computer terminal connected                 in Section 4, impact was simply measured by count-
to all other terminals, enters ideas at his or her own              ing these “descendant” ideas. More precisely, partic-
pace, and has access to the ideas entered by the other              ipants rewarded for their impact scored 1 point for
group members. The online system proposed here is                   each new idea that was entered in a tree below one
anonymous and asynchronous as well.                                 of their ideas.15 For example, if idea 2 built on idea 1,
                                                                    and idea 3 on idea 2, then when idea 3 was posted,
3.2.  Measuring the Contribution and the Impact of                  1 point was given to the authors of both idea 1 and
      Participants                                                  idea 2. Participants rewarded for their own contribu-
One way to measure the contribution and impact                      tions scored a fixed number of points per idea. The
of participants would be to have them evaluated by                  exploration of alternative measures is left for future
external judges. However, this approach has limita-                 research.
tions. First, it is likely to trigger fear of evaluation.
Second, the evaluation criteria of the moderator, the               3.3. Preventing Cheating
judges, and the participants might differ. Third, it                Although this structure provides potential measures
increases the cost of the session. The proposed ideation            of the contribution and impact of the different partic-
game instead adopts a structure that provides objec-                ipants, if the scoring system were entirely automatic
tive measures of these quantities. These objective mea-             and if no subjective judgment were ever made, par-
sures do not require additional evaluation, are com-                ticipants could “cheat” by simply posting irrelevant
puted based on well-stated rules, and offer continuous              ideas to score unbounded numbers of points. Con-
feedback on the performance of the participants.                    sequently, some level of subjective judgment seems
   Bibliometric research suggests that the number of                inevitable. These judgments, however, should keep
ideas submitted by a participant should be a good
measure of his or her contribution and that his or her              15
                                                                      To facilitate the comparison across conditions, points were scored
number of “citations” should be a good measure of                   only for the first five “descendant” ideas in the second experiment
his or her impact (King 1987). The proposed structure               (see §4 for details).
Toubia: Idea Generation, Creativity, and Incentives
Marketing Science 25(5), pp. 411–425, © 2006 INFORMS                                                                                                             417

Figure 1       Example of an Ideation Game

           -(idea #77) dperry: The Security Council will never have power as long as       TOPIC: How can the impact of the UN security council be increased?
           there exist superpowers who have incentives to go against UN orders. We         test7, you have 0 points
           need to set up incentives in such a way that it is disadvantageous to the US                                             View the rules of the Game
                                                                                                    Recompute
           (and other superpowers) to do so.
             -(idea #79) dsc: One problem with this approach is How will we ever be
           able to get the US to cede power to the UN? We can’t credibly get countries
           to agree to destroy (and not rebuild) their arms, for example. There is no
           way to enforce this!
               -(idea #81) dperry: How about giving the UN security council a                       Enter an idea not building on any previous idea
           stockpile of weapons or an armed force (separate from any nation) that it
           could use to enforce it’s orders?
                  -(idea #84) dsc: I fail to see how we could set it up so that people                             React to / build on idea #   submit
           would want to serve in the UN’s armed forces rather than in the armed
           forces of their own country?
                     -(idea #86) dperry: Indeed, The prestige of the armed forces of the
           UN would need to precede it’s strong buildup. But perhaps we could start
           with paying these soldiers a lot!

                  -(idea #136) dsc: One problem with this approach is that giving
           weapons to the UN itself seems a little like a band-aid approach to the
           problem. Giving the UN the weapons, while keeping true decision making
           power (which is directly tied to economic power) doesn’t really change the
           scope of the “game.” We need to devise a strategy that aims to lift up the
           smaller countries — while reducing the incentive of more powerful
           countries to intimidate others. One thought (though admittedly diffcult to
           implement) would be to tax the more powerful countries based upon their
           stockpile of weapons and redirect those funds to lesser developed nations.
                     - (idea #138) dperry: In particular, any treaty that is agreed upon
           would have to include agreements that tied together each countries
           economic decisions, decisions to build weapons of mass destructior, and
           decisions to exploit other countries. The US sort of does this implicity when
           it gives aid to countries to deter them from being hostile/building weapons.
           But perhaps making the agreement uniform across all nations would
           imporve the viability of the UN.

fear of evaluation to a minimum and limit costly inter-                                    until the moderator visits the session and determines
ventions by external judges. This is addressed by care-                                    who, between i and j, was right.17 The participant
fully defining the powers of the moderator of the                                           who was judged to be wrong then pays a fee to
session. First, the moderator does not have the right                                      the other participant.18 This mechanism is economi-
to decide which ideas deserve points. However, he                                          cal because it reduces the frequency with which the
or she has the power to expel participants who are                                         moderator needs to visit the session, without increas-
found to cheat repeatedly, i.e., who submit ideas that                                     ing its cost, because challenges result in a transfer of
clearly do not address the topic of the session or who                                     points between participants (no extra points need to
wrongly assign new ideas to father-ideas. This type                                        be distributed). Another argument in favor of hav-
of relation between the participants and the modera-                                       ing participants monitor each other is the finding by
tor is called a “relational contract” in agency theory.                                    Collaros and Anderson (1969) that fear of evaluation
In this relationship, the source of motivation for the                                     is greater when the evaluation is done by an expert
agent is the fear of termination of his or her relation                                    judge rather than by fellow participants.
with the principal (Baker et al. 1998, Levin 2003). In
the present case, if the moderator checks the session                                      3.4. Relation with Existing Idea-Generation Tools
often enough, it is optimal for participants to only                                       Most existing idea-generation tools can be thought of
submit ideas that they believe are relevant.                                               as reflecting one of two views of creativity. The first
   To reduce the frequency with which the modera-                                          view is that participants should be induced to think
tor needs to check the session, this relational contract                                   in a random fashion. This widely spread belief, based
is complemented by a mutual monitoring mechanism                                           on the assumption that anarchy of thought increases
(Knez and Simester 2001, Varian 1990). In particular,                                      the probability of creative ideas, has led to the devel-
if participant i submits an idea, which is found to                                        opment of tools such as brainstorming (Osborn 1957),
be fraudulent by participant j, then j can “challenge”                                     synectics (Prince 1970), or lateral thinking (De Bono
this idea.16 This freezes the corresponding stream of
ideas (no participant can build on a challenged idea)                                      17
                                                                                                The idea is deleted if j was right.
                                                                                           18
                                                                                             The amount of this fee was fine tuned based on pretests and was
16
  In the implementation used so far, participants cannot challenge                         set to 5 points in Experiment 1 and 25 points in Experiment 2 (the
an idea if it has already been built upon.                                                 average number of points per idea was higher in Experiment 2).
Toubia: Idea Generation, Creativity, and Incentives
418                                                                          Marketing Science 25(5), pp. 411–425, © 2006 INFORMS

1970). In contrast, recent papers suggest that struc-         In both experiments, the only difference between
ture, and not randomness, is the key to creativ-           conditions was the incentive system; that is, the man-
ity (Goldenberg et al. 1999a). This structured view,       ner in which points were scored in the game. Each
according to which creativity can be achieved through      participant was randomly assigned to one idea-gen-
the detailed application of well-defined operations,        eration session, and each idea-generation session was
has led to systematic approaches to idea genera-           assigned to one incentive condition (all participants
tion. Two important examples are inventive templates       in a given session were given the same incentive
(Goldenberg et al. 1999b, Goldenberg and Mazursky          scheme). The points scored during the session were
2002) and the theory of inventive problem solving          later translated into cash rewards.
(TRIZ) (Altshuller 2000). The ideation game proposed
in this paper is probably closer to the latter view. By    4.1.   Experiment 1
organizing ideas into trees and by offering the par-
ticipants a menu of conjunctive phrases that high-            4.1.1. Experimental Design. Experiment 1 had
light and articulate the relation between ideas, this      three conditions. A total of 78 participants took part
structure requires the participants to identify the com-   in the experiment over a period of 10 days, signing
ponents of the previous ideas on which their new           up for the sessions at their convenience. Three sets
ideas build more heavily. A possible extension of this     of three parallel sessions were run (one session per
game would be to replace ideas with product config-         condition in each set), defining three “waves” of par-
urations and to replace conjunctive phrases with the       ticipants.19 Each session lasted up to five days, and
five inventive templates proposed by Goldenberg and         within each wave, the termination time of the three
Mazursky (2002). Instead of building on each other’s       sessions was the same.
ideas, participants would apply inventive templates           Recall that the analysis in §2 relies on the assump-
to each other’s proposed product configurations.            tion of an equal level of participation across partic-
                                                           ipants. This was addressed by calibrating the value
3.5. Practical Implementation                              of points in the different conditions based on a
This ideation game was programmed in PHP, using            pretest, such that participants in all conditions could
a MySQL database. Its structure and the instruc-           expect similar payoffs.20 More precisely, the first con-
tions were fine tuned based on two pretests. The            dition (the “Flat” condition) was such that partici-
pretests used participants from a professional mar-        pants received a flat reward of $10 for participation. In
keting research/strategy firm. One pretest dealt with       this condition, no points were scored (points were not
improving the participants’ workspace and a second         even mentioned). In the second condition (the “Own”
dealt with reentering a market.                            condition), participants were rewarded based exclu-
   In the implementation, the moderator also has the       sively on their own contributions and scored 1 point
ability to enter comments, either on specific ideas or      per idea submitted (each point was worth $3). In the
on the overall session. Participants also have the abil-   third condition (the “Impact” condition), each partic-
ity to enter comments on specific ideas. This allows        ipant was rewarded based exclusively on the impact
them, for example, to ask for clarification or to make
                                                           of his or her ideas. Participants scored 1 point each
observations that do not directly address the topic
                                                           time an idea was submitted that built on one of their
of the session. The difference between comments and
                                                           ideas (see previous section for the details of the scor-
ideas is that comments are not required to contribute
                                                           ing scheme). Each point was worth $2 for the first
positively to the session, are not rewarded, and can-
                                                           two waves of participants; the value of points was
not be challenged.
                                                           decreased by half to $1 for the last wave. The results
                                                           for the third wave were similar to those for the first
4.    Experiments                                          two waves; hence, the same analysis was applied to
I now report the results of two experiments run            the data from the three waves.
using the ideation game described above. Experi-
ment 1 tested whether incentives have the potential to     19
                                                              The first wave consisted of the first 36 participants who signed
improve idea generation and allowed an initial inves-      up and had 12 participants per condition; the second wave con-
tigation of the difference between rewarding partic-       sisted of the following 20 participants, with 7 participants in the
ipants for their individual contributions versus their     “Flat” and “Own” conditions and 6 in the “Impact” condition; and
impact. Being performed online over a few days, this       the last wave consisted of the last 22 participants, with 8 in the
                                                           “Flat” condition and 7 in the “Own” and “Impact” conditions. Par-
experiment allowed studying the effect of incentives
                                                           ticipants were cyclically assigned to the “flat,” “own,” or “impact”
on the level of participation and on the dynamics of       session of the corresponding wave.
the sessions. Experiment 2 was performed in a lab          20
                                                             In this pretest, a group of approximately 15 employees from a
and allowed a more direct test of the hypotheses pro-      market research firm generated ideas on “How can we better utilize
posed in §2.                                               our office space?”
Toubia: Idea Generation, Creativity, and Incentives
Marketing Science 25(5), pp. 411–425, © 2006 INFORMS                                                                                                419

Table 2           Results                                                         the three judges). They were also significantly more
                                                                                  likely to submit at least one unique idea (p value <
                                                     Impact       Own      Flat
                                                                                  004), submitted significantly more unique ideas con-
Quantitative results                                                              ditioning on submitting at least one (p value < 002),
  Number of unique ideas per participant              46∗         23      08   and submitted ideas that were on average 76% longer.
  Proportion of participants who posted              68∗          54       48
    at least one unique idea (%)
                                                                                  Participants in the “Own” condition, in turn, per-
  Number of unique ideas given that                    68∗        43∗∗    16   formed better than participants in the “Flat” condi-
    at least one                                                                  tion, although not significantly so on all metrics.22
  Number of words per idea                           793∗        449     456      The qualitative results reported in Table 2 were
Qualitative ratings                                                               obtained by averaging the ratings of the three judges.
  Total contribution                                   58         47      36   The ratings were found to have a reliability of 0.75
  Number of star ideas                                 62         33      17
                                                                                  (Rust and Cooil 1994), which is above the 0.7 bench-
  Proportion of ideas identified as stars               80         82     100
     by at least one judge (%)                                                    mark often used in market research (Boulding et al.
  Breadth                                              61         53      32   1993).23 (Given the low number of judges, signifi-
  Depth                                                68         46      36   cance tests for the qualitative ratings are not avail-
  Novelty                                              56         52      44   able.) The sessions in the “Impact” condition were
  Thought provoking                                    58         52      40
                                                                                  judged to have a larger overall contribution, more
  Interactivity                                        73         47      32
                                                                                  “star” (i.e., very good) ideas (although the proportion
     ∗
         Impact significantly larger than Own at the 0.05 level.                   of “star” ideas was nonsignificantly different across
     ∗∗
          Own significantly larger than Flat at the 0.05 level.
                                                                                  conditions), more breadth, and depth, and to have
                                                                                  ideas that on average were more novel, thought pro-
   To provide a strong test of the hypothesis that in-                            voking, and interactive (interactivity is defined here
centives can improve idea generation, an engaging                                 as the degree to which a “son-idea” builds on its
topic, as well as some motivated participants, were                               “father-idea” and improves upon it).
selected. In particular, the topic was: “How can the                                 4.1.3. The Effect of Incentives on Participation.
impact of the U.N. Security Council be increased?”                                Incentives seem to have had an effect on the effort
(the experiment was run in March 2003, during the                                 spent by participants. Indeed, 100% of the participants
early days of the U.S.-led war in Iraq), and the partici-                         who submitted at least one unique idea in the “Flat”
pants were recruited at an antiwar walkout in a major                             condition did so in the first 30 minutes after signing
metropolitan area on the East Coast, as well as on                                up versus 65% for the “Impact” condition and 64%
the campus of an East Coast university. Three gradu-                              for the “Own” condition. In particular, 18% (respec-
ate students in political science in the same university                          tively, 21%) of the participants who submitted at least
(naïve to the hypotheses and paid $50 each for their                              one idea in the “Impact” condition (respectively, the
work) were later hired as expert judges.                                          “Own” condition) did so more than three hours after
   4.1.2. Results. Both the quantitative and qualita-                             signing up. This is consistent with the hypothesis that
tive results are summarized in Table 2. Compared                                  all three conditions faced the same distribution of par-
to the “Own” condition, participants in the “Impact”                              ticipants, but that when incentives were present, par-
condition submitted significantly more unique ideas                                ticipants tried harder to generate ideas and did not
on average (p value < 005),21 where the number of                                give up as easily.
unique ideas is defined as the number of ideas minus                                  For participants who submitted at least one idea,
the number of redundant ideas (an idea is classified                               incentives also influenced the frequency of visit to the
as redundant if it was judged as redundant by any of                              session as well as the number of ideas per visit. Let
                                                                                  us define “pockets” of ideas such that two succes-
21                                                                                sive ideas by the same participant are in the same
   The numbers of ideas submitted by different participants are
not totally independent because participants are influenced by the                 pocket if they were submitted less than 20 minutes
ideas submitted by the other members of their group. However, an                  apart (the time at which each idea was submitted
endogeneity issue arises, because the number of ideas submitted
by participant i depends on the number of ideas submitted by par-
                                                                                  22
ticipant j and vice versa. To limit this issue, a regression was run                p values of 0.18, 0.17, and 0.04, respectively, for the number of
with the number of ideas submitted by participant i as the depen-                 unique ideas, for the proportion of participants who submitted
dent variable, and three dummies (one per condition), as well as                  at least one unique idea, and the number of unique ideas given
the number of ideas that were submitted by the other members                      that at least one was submitted.
                                                                                  23
of participant i’s group before he or she signed up as independent                  All ratings, except for the number of star ideas, are on a 10-point
variables. This last independent variable is still endogenous, but it             scale. For each measure and for each judge, the ratings were nor-
is predetermined, leading to consistent estimates of the parameters               malized to range between 0 and 1. Then, ratings were classified into
(Greene 2000). A simple contrast analysis yielded similar results as              three intervals: 0 1/3, 1/3 2/3, and 2/3 1. The same procedure
this regression.                                                                  was used in Experiment 2.
Toubia: Idea Generation, Creativity, and Incentives
420                                                                                                            Marketing Science 25(5), pp. 411–425, © 2006 INFORMS

Table 3       Dynamics                                                     Figure 2                     Number of Ideas as a Function of Time

                                         Impact         Own         Flat                       80
                                                                                               70           “Flat” condition
Number of ideas per pocket                 2.9          2.3         1.2                                     “Own” condition

                                                                             Number of ideas
                                                                                               60
Number of pockets per participant          2.6          1.6         1.2                                     “Impact” condition
                                                                                               50
                                                                                               40
was recorded).24 Table 3 reports the average number                                            30
of ideas per pocket for the participants who posted                                            20
at least one idea, as well as the average number                                               10
of pockets. Participants in the “Own” and “Impact”                                              0
conditions submitted significantly more ideas per                                                    0             10                20             30         40
visit compared to participants in the “Flat” condi-                                                                            Time (hours)
tion (p values < 004). However, participants in the
“Impact” condition did not submit significantly more                        periods of high activity start at very similar times for
ideas per visit compared to the participants in the                        the different participants within a session, suggesting
“Own” condition (p value = 035). The results so far                       a high level of interaction between participants. On
have suggested a similar effect of incentives on partic-                   the other hand, Figure A.2 shows that sessions in the
ipation in the “Own” and “Impact” conditions. How-                         “Flat” condition displayed much less structure, which
ever, participants in the “Impact” condition visited                       explains the smoother aspect of the aggregate graphs
the session marginally significantly more often than                        (the aggregate graphs in this condition are the sum of
participants in the “Own” condition (p value = 009).                      independent graphs).
Participants in the “Own” condition did not visit the                         Another approach to studying interactions among
session significantly more often than participants in                       participants is to investigate the influence of incen-
the “Flat” condition (p value = 019).                                     tives on the relative proportion of the following three
   4.1.4. The Effect of Incentives on the Level of                         categories of ideas: (1) “new ideas” that do not build
Interactions. It is interesting to study how incentives                    on any previous ideas, (2) “self-citations” that build
influenced the overall number of ideas submitted in                         directly on an idea from the same participant, and
the session as a function of time. Figure 2 (corre-                        (3) “nonself-citations” that build on another partici-
sponding to the first wave of participants—the graphs                       pant’s idea. A higher proportion of “nonself-citations”
for the other two waves having similar characteristics)                    may be interpreted as reflecting a higher level of inter-
shows that the process in the “Impact” condition is                        actions between participants. As indicated by Table 4,
S-shaped, whereas the process in the “Flat” condition                      the proportion of “nonself-citations” was highest in
tends to be smoother.25 The process in the “Own” con-                      the “Impact” condition, followed by the “Own” con-
dition is somewhat intermediary between these two                          dition and the “Flat” conditions (all numbers in the
extremes.                                                                  last row are significant at the p < 005 level).
   To better understand the shapes of these graphs, it                       4.1.5. Reconciling the Results with the Social
is useful to plot similar graphs at the individual level.                  Psychology Literature. The results of this experiment
Figure A.1 in the appendix gives an example for a                          suggest that incentives have the potential to improve
particular session, with one graph per participant.26                      idea generation. However, as was mentioned in the
These graphs indicate that the shape of the aggregate                      Introduction, the social psychology literature seems
process in the “Impact” condition comes from the fact                      to predict that incentives are more likely to hurt idea
that at the individual level, participation in this con-                   generation (Spence 1956, Zajonc 1965, McCullers 1978,
dition is also characterized by a period of inactivity                     McGraw 1978). This prediction relies in great part on
followed by a period of high activity during which                         the observation that idea generation is not a task in
participation is roughly linear in time. Moreover, the                     which there exist easy algorithmic solutions, achiev-
                                                                           able by the straightforward application of certain
24
  Similar results were obtained when defining pockets using 10 or           operations. McGraw (1978) contrasts tasks such that
30 minutes.
25
   Time on the x axis is the total cumulative time spent by par-           Table 4                      Proportions of “New Ideas,” “Self-Citations,” and “Nonself-
ticipants in the session when the idea was submitted, divided by                                        Citations”—Experiment 1
the number of participants. For example, if an idea was posted at
5 p.m. and at this time, two participants had signed up, one at 2 p.m.                                                 Impact (%)             Own (%)      Flat (%)
and one at 3 p.m., then the reported time is 5 − 2 + 5 − 3/2 =
25 hours. A simpler measure of time, the total clock time elapsed         New ideas                                      135                 308          53.3
since the first participant signed up, gives similar results.               Self-citations                                  45                  90          10.0
26                                                                         Nonself-citations                              821                 603          36.7
     Clock time is used in the x axis for the individual-level graphs.
Toubia: Idea Generation, Creativity, and Incentives
Marketing Science 25(5), pp. 411–425, © 2006 INFORMS                                                                        421

the path to a solution is “well mapped and straight-        rewarded for their number of citations scored 1 point
forward” with tasks such that this path is more com-        per citation, with a maximum of 5 points per idea.
plicated and obscure. He argues that incentives are         Each point was worth 20 cents, and participants
likely not to help with this second type of tasks but       received an additional $3-show-up fee. The average
notes that “it is nonetheless possible for reward to        number of points per idea in the “Impact” conditions
facilitate performance on such problems in the case         was 1.43, making the expected payoff per idea com-
where the algorithm (leading to a solution) is made         parable under both incentive schemes (the number
obvious” (p. 54). Such facilitation might have hap-         of points per idea in the “Own” conditions was cali-
pened in the present experiment. In particular, the         brated based on a pretest). The topic of each session
structure of the ideation game might have made the          was either “How could [our University] improve the
mental steps leading to new ideas more transparent,         education that it provides to its students?” or “How
allowing the participants to approach the task in a         to make an umbrella that would appeal to women?”
more “algorithmic” manner.                                  The first topic was chosen because it appeared to be
                                                            one of the broadest and richest possible topics in a
   4.1.6. Discussion. Experiment 1 suggests that
                                                            New Product Development context, asking the con-
incentives do have the potential to improve idea
                                                            sumers of an organization to provide ideas on how
generation. It also suggests that rewarding individ-
                                                            to improve its product. Hence, it was expected to be
ual contribution and rewarding impact lead to very
                                                            characterized by a slowly diminishing marginal con-
different behaviors. However, it does not allow a
                                                            tribution. The second topic was chosen for its appar-
direct test of Hypotheses 1 and 2. In particular, incen-
                                                            ently narrower scope, at least to the participant pop-
tives seem to have had an influence on the partici-
                                                            ulation. This topic was expected to be characterized
pants’ level of involvement in the sessions, while the
                                                            by a faster diminishing marginal contribution. I will
hypotheses assume that participation in the “Own”
                                                            later attempt to validate this assumption of different
and “Impact” conditions is similar. Although the
                                                            speeds of diminishing marginal contribution.
monetary value of points was calibrated to equate the
expected payoff per idea across conditions, the cali-         4.2.2. Results—Slowly Diminishing Marginal
bration was based on a pretest using a different topic      Contribution. Let us first consider the sessions on
and did not take participants’ subjective beliefs into      “How could [our University] improve the education
account. Hence, the expected payoff per idea might          that it provides to its students?” Hypothesis 1 predicts
have been perceived as higher in the “Impact” condi-        that the amount of exploration will be higher when
tion. Furthermore, Experiment 1 does not allow com-         participants are rewarded for their impact. Explo-
paring topics with different speeds of diminishing          ration is characterized by a lower short-term expected
marginal contribution and does not allow studying           contribution but a higher potential long-term impact.
the level of exploration as a function of the incentives.   This suggests that a participant who engages in explo-
   These limitations were addressed in three ways           ration will produce fewer ideas per unit of time but
in Experiment 2. First, the amount of time spent            will produce ideas that are more impactful.27
by participants on the task was controlled by run-            Let us use the difference between the submission
ning the sessions in a laboratory, which also allows        time of an idea and the submission time of the pre-
a more direct investigation of exploration. Second,         vious idea by the same participant as a proxy for
the expected payoff per idea in the “Impact” condi-         the amount of time spent generating the idea and
tion was bounded such that ideas scored points for          adopt the same classification of ideas as in the pre-
their first five citations only. Third, two different top-    vious experiment. Table 5 indicates that participants
ics were tested, with different speeds of diminishing       in the “Impact” condition spent significantly more
marginal contribution.                                      time generating “new ideas” compared to participants
                                                            in the “Own” condition (p value < 001). Moreover,
4.2.   Experiment 2                                         the correlation between the time spent generating
                                                            a “new idea” and the total number of ideas sub-
  4.2.1. Experimental Design. One hundred and
                                                            mitted by other participants lower in the same tree
ten students from a large East Coast university
                                                            was significantly positive ( = 017, p value < 001).28
took part in 45-minute idea-generation sessions in
groups of up to 4 participants. Each group was
                                                            27
randomly assigned to one of four conditions in a              In the context of the model from §2, exploration consists in fol-
                                                            lowing an approach with an a priori lower probability of success.
2 (type of incentives = “Own” versus “Impact”) ×
                                                            However, if exploration is successful and an idea is generated, the
2 (topic: slowly diminishing marginal contribution          expected long-term contribution from this approach is higher.
versus quickly diminishing marginal contribution)           28
                                                              The same result holds if the analysis is done on all ideas (p value
design. Participants rewarded for their number of           for time < 001 and p value for correlation < 002). However, focus-
ideas scored 2 points per idea, and participants            ing on “new ideas” allows a more direct investigation of explora-
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