The potential benefits of costly applications in grant contests

Abstract

When funding public goods, resources are often allocated via mechanisms that resemble contests, especially in the case of scientific grants. A common critique of these contests is that they induce "too much" effort from participants working on applications. However, this paper emphasizes the importance of understanding the externalities associated with participation in these contests before drawing conclusions about the optimal mechanism design. Survey-based estimates suggest that the social costs of time spent on scientific grant applications may not be a first-order concern in non-emergencies. Still, further research is required to better understand how scientists compete in grant contests.