Center for Behavior, Institutions and the Environment / CBIE Working Papers / Do Patents Improve the Innovation Process?

Do Patents Improve the Innovation Process?

CBIE_WP-2018-001

Abstract

Innovation can be approached as a social dilemma. If innovators are rewarded for a successful innovation, sharing information about successes and failures during the innovation process will benefit the group, but not the individual innovator. Patents allow for innovators to share information about successes and also to collect some of the benefits. In this paper we report on a controlled experiment of an innovation task in which we test the effect of patents on the innovation process. Furthermore, we used an agent-based model to test alternative explanations of the observations. We found that the patents adversely impact the ability to find good solutions by decreasing the likelihood of copying, which seems to lead to better local searching and the ability to find high scoring solutions. Although optimal search strategies demonstrate that participants should search randomly and share information conditionally, comparing experimental results to agent-based strategies suggests that participants also use internal thresholds when making decisions about searching for new solutions and often share information even when uncooperative behavior is taking place. The patent may lessen the use of signaling and conditional cooperation in favor of increased sharing behavior, but this did not produce commensurate changes and benefits from innovation searches.

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Published January 22, 2018

Madeline Tyson, Arizona State University

Marco A. Janssen, Arizona State University