INCENTIVES IN BASIC RESEARCH

Individuals involved in basic research, like other workers, respond to incentives. Funding agencies provide implicit incentives when they sp ecify the rules by which awards are made. The following analysis is an -exercise in understanding incentives at an applied level. Specific ru les are examined. What is the effect of rewarding past effort? What ha ppens when a few large awards are replaced by many small, awards? How does the timing of an a nard affect effort? How does an agency choose which topics to fund? Socially optimal rules are derived.