Government Expenditure on Research Plans and their Diversity

TL;DR

This paper models government research funding as a strategic game, showing that in equilibrium, funds are distributed evenly across research plans, promoting diversity and reducing bias in allocations.

Contribution

It introduces a game-theoretic model of government research funding, revealing that equilibrium leads to symmetric, unbiased, and diverse research expenditure.

Findings

Government adopts as many active plans as possible in equilibrium.

Research plans are distributed proportionally in equilibrium.

Equal distribution of funds promotes research diversity.

Abstract

In this study, we consider research and development investment by the government. Our study is motivated by the bias in the budget allocation owing to the competitive funding system. In our model, each researcher presents research plans and expenses, and the government selects a research plan in two periods---before and after the government knows its favorite plan---and spends funds on the adopted program in each period. We demonstrate that, in a subgame perfect equilibrium, the government adopts equally as many active plans as possible. In an equilibrium, the selected plans are distributed proportionally. Thus, the investment in research projects is symmetric and unbiased. Our results imply that equally widespread expenditure across all research fields is better than the selection of and concentration in some specific fields.