How to Evaluate Innovative Ideas

THE ERC PROJECT OF MARCO OTTAVIANI INVESTIGATES THE DESIGN OF INSTIUTIONS CALLED TO JUDGE UPON PROJECTS THAT HAVE HIGHLY UNCERTAIN OUTCOMES

Governmental agencies, venture capitalists, organizations for funding research, professional forecasters and scientific journals have at least one thing in common: they evaluate new ideas. The point is: how do they do it? Are they fittingly designed to pick up the best innovators? Do their mechanisms ensure an accurate evaluation? Marco Ottaviani’s (Department of Economics) project Designing Institutions to Evaluate Ideas (EVALIDEA), hosted by IGIER - Innocenzo Gasparini Institute for Economic Research, funded with an ERC Advanced Grant, aims to develop a general theoretical framework to investigate the design of institutions that face the problem to award innovations that have highly uncertain outcomes.
 
One line of research is about the incentives to convince a decision maker to approve a new idea. The institution should take into consideration that the information submitted by another party may not be completely honest and thus it might change its own approval standards. Even though the project is for the most part theoretical, there is some empirical testing. Christian Decker, a research assistant, is currently working within this framework on clinical trials in the United States.
 
“We are looking at the statistical results of trials that are meant to convince the regulator that a new drug is efficient, safe and that it can be sold to the general public. The overall distribution of results is more favorable than you would expect it to be, especially in the last phase of trials before the approval decision. This is suspicious”.

Read here the other articles on the ERC research projects:
The Dream Team of Research made in..ERC
University at the Time of Star Wars
The Culture That Influences Demography
For a History of Inequality in Europe
Fostering Solidarity in Times of Migrations
A Theory of Games and Emotions
Why with Broadband We will have More Children
How to Communicate Climate Science
At the Birth of Maritime Insurance
Even Distorted Choices can be Rational
The Psychology of Economic Behavior
Great Expectations for Great Objectives
What we are Certain about Uncertainty
Putting a Halt to the Spread of Infections
Wellbeing and Fertility, a Two-Way Relationship
The Role of Financial Imperfections
The World Through the Lens of Power
The Selection of the Political Class
A Help for Those who make Predictions
When a Government is Guided by Values
 

 

by Claudio Todesco