Innovation Tournament Design with Grouping Decisions

Crowdsourcing contests can gather group wisdom and open up new ways for companies to obtain innovative solutions. This paper studies crowdsourcing contests in a grouped mode where the organizer of the contest divides the participants into professional and amateur groups according to their level of expertise, holding a crowdsourcing contest for each group. Both crowdsourcing contests without entry fees and crowdsourcing contests with entry fees are considered. We use game theory models to conduct an in-depth study on how organizers should organize crowdsourcing
contests in the grouped mode. The equilibrium effort of ontestants and the benefits of organizers in the two modes are analyzed. The results show that when the number of participants is small or sufficiently large, and the entry fee is low enough, the organizer’s benefits with our proposed grouped mode are better than those with the non-grouped mode, regardless of whether the organizer focuses on the average performance or the best performance of the contestants. We verify our conclusions with numerical results.