- 26 Feb 2019
- Working Paper Summaries
Infringing Use as a Path to Legal Consumption: Evidence from a Field Experiment
Copyright infringement may result from frictions preventing legal consumption, but also reveals demand. This study quantifies the effects of providing more-suitable options and reducing search costs.
- 28 Nov 2016
- Research & Ideas
Challenging the Belief that Liability Laws Kill Medical Device Innovation
Many policymakers believe liability laws need reforming so that medical device makers are free to innovate without threat of costly lawsuits. But new research by Hong Luo and Alberto Galasso suggests innovation is not thwarted—just rechanneled. Open for comment; Comment(s) posted.
- 17 Jul 2016
- Working Paper Summaries
Tort Reform and Innovation
This paper investigates how tort reforms might affect the development of new medical device technologies. The authors find that caps on non-economic damages (such as pain and suffering) are associated with an average decline in patenting for medical instrument technologies. The effect, however, is highly varied and depends on the characteristics of both the devices and the medical fields.
- 15 Jun 2016
- Working Paper Summaries
Slack Time and Innovation
This study combines data about projects posted on Kickstarter with the timing of school breaks of top US colleges to find that slack time can lead to an increase in creative projects, particularly those that are relatively complex and high quality. Managers in corporations that emphasize innovation should consider providing their employees with coordinated slack time particularly to advance development of novel ideas.
- 23 May 2016
- Research & Ideas
A Little Understanding Motivates Copyright Abusers to Pay Up
Many Internet users don't give a second thought to copying and reusing an image. Hong Luo and Julie Holland Mortimer explain how copyright holders can gently persuade abusers to do the right thing. Open for comment; Comment(s) posted.
- 06 Apr 2016
- Research & Ideas
Should Entrepreneurs Pitch Products or Ideas for Products?
Entrepreneurs with a new product idea must decide whether to pitch the concept or provide an actual prototype. Which works best? Professor Hong Luo finds answers in Hollywood screenplays. Open for comment; Comment(s) posted.
- 25 Sep 2015
- Working Paper Summaries
Invest in Information or Wing It? A Model of Dynamic Pricing with Seller Learning
Dealers who need to price idiosyncratic products--like houses, artwork, and used cars--often struggle with a lack of information about the demand for their specific items. Analyzing sales data from the used-car retail market, the authors of this paper develop a model of dynamic pricing for idiosyncratic products, showing that seller learning has an impact on pricing dynamics through a rich set of mechanisms. Overall, findings suggest a potentially high return to taking a more serious information-based approach to pricing idiosyncratic products.
- 04 Oct 2013
- Working Paper Summaries
Imperfect Information, Patent Publication, and the Market for Ideas
The market for ideas improves the innovation process by promoting division of labor between upstream inventors and downstream developers. Frictions such as asymmetric information and search costs may hinder the smooth functioning of the market and delay, or even block, mutually profitable transactions between buyers and sellers. In this paper, the authors study the effects of an important disclosure mechanism, the publication of patent applications, on mitigating these frictions and, thus, facilitating transactions in the market for ideas. In particular, they employ an important policy change in the American Inventors Protection Act (AIPA), which required that U.S. patent applications filed beginning on November 29, 2000 be published 18 months after the application date. Findings show that post-AIPA patents, on average, are licensed 8.5 months earlier than pre-AIPA inventions. This shortening of the licensing lag is economically significant, given the 20-year duration of U.S. patents, and can translate to millions of dollars in profits and licensing revenues. Key concepts include: Disclosure through patent publication facilitates transactions in the market for ideas, potentially through reducing frictions such as information asymmetries, search costs, and costs of evaluating competing ideas. For inventors that choose to license, 18-month publication accelerates licensing by 8.5 months on average. Closed for comment; 0 Comment(s) posted.
- 09 Jan 2012
- Working Paper Summaries
When to Sell Your Idea: Theory and Evidence from the Movie Industry
How completely should an innovator develop his idea before selling it? HBS assistant professor Hong Luo addresses this question in a theoretical framework that links the sales stage to the innovator's "observable quality." She uses the context of Hollywood movie script writing-looking at whether it's better to pitch the mere idea for a film or to write the entire screenplay and then try to sell it "on spec." Key concepts include: Pitching an idea before a script is written can be advantageous in that it affords the opportunity to get early feedback from a prospective buyer, and saves time for the writer if the buyer thinks the idea is worthless. However, pitching comes with the risk of expropriation. Lesser-known, inexperienced writers are excluded from the market for pitches, forcing them to either fully develop the idea or drop it entirely. Writers who have a choice in the matter tend to sell their better ideas on spec-turning them into fully-formed screenplays before introducing them to prospective buyers. But they will pitch their worse ideas at an early stage. Closed for comment; 0 Comment(s) posted.
Judgment Aggregation in Creative Production: Evidence from the Movie Industry
Selecting early-stage ideas in creative industries is challenging because consumer taste is hard to predict and the quantity to sift through is large. Using The Black List that ranks scripts annually based on nominations from film executives, this study shows that aggregating expert opinions helps reduce quality uncertainty and can influence high-budget production.